Swedish Krona to Pound Sterling (SEK/GBP) Exchange Rate Firms on Industrial Data

The Swedish Krona (SEK) to Pound Sterling (GBP) exchange rate firmed slightly on Friday as domestic industrial production data supported and as the UK currency was weakened by disappointing trade balance data.

According to Statistics Sweden, industrial production in the Scandinavian nation increased by 1% month-on-month in June, a sharp reversal from the -3% decline witnessed in May.

On an annual basis industrial production declined by -1.1%, a slowdown compared to the preceding months decline of -2.3%.

Orders declined by 0.5% on a year on year basis, as weakness in the Eurozone weighed upon demand.

A separate report released by Statistics Sweden also showed that service production eased by 0.1% in June. Despite the softening production advanced by 2.6% compared to the same period as last year.

The Pound fell against the majority of its peers after data released by the Office for National Statistics showed that the UK’s trade deficit widened to the most in almost a year.

According to the report UK overseas sales fell by 1.6% and imports dropped by 0.4%.

The trade deficit widened to £9.4 billion from £9.2 billion, with the second quarter deficit climbing to £27.4 billion, the most for a quarter seen since last September.

‘The trade figures are some of the worst seen in recent history, and likely worsen further in July after PMI survey data showed manufacturing expanded at the slowest rate for a year in July, caused primarily by a deterioration in export growth. Exporters are being hit on two fronts. First, an appreciating exchange rate, which has risen 10% over the past year, is making UK-produced goods more expensive abroad’ said Markit’s chief economist Chris Williamson.

Also weighing upon demand for UK exports is the heightened concerns over geopolitical issues. With uncertainty growing regarding the Ukraine crisis, the conflict in Gaza and now as the escalation in the fighting in Iraq global risk aversion is rising.

Market sentiment was under pressure after US President Barack Obama announced that the US Air Force would be launching airstrikes against Islamist Jihadist fighters in order to prevent the genocide of religious minority groups in Iraq.