August 1, 2019 - Written by John Cameron
STORY LINK Pound Swedish Krona (GBP/SEK) Exchange Rate Sinks as Swedish Manufacturing PMI Stabilises
GBP/SEK Exchange Rate Falls as UK Manufacturing PMI Remains in Contraction Territory
The Pound Swedish Krona (GBP/SEK) fell by -0.5% today, leaving the pairing fluctuating around 11.700Kr.
The Swedish Krona (SEK) rose against the Pound (GBP) following the publication of the Swedish Manufacturing PMI for July, which exceeded the forecast 50.5 easing and remained at 52.
As Sweden’s manufacturing sector dominates a large part of the economy, this has provided some positive indication for Sweden’s growth figures this quarter, despite a poor performance in the second-quarter.
However, some Swedish Krona investors are remaining cautious.
Olle Holmgren, an Economist at the Swedish bank SEB, commented:
‘The hope that we would see decent growth this year was based on the second quarter being good.’
The Pound failed to benefit from today’s release of the Markit Manufacturing PMI for July, which beat forecasts but remained in contraction territory at 48.0.
Rob Dobson, a Director at IHS Markit, commented:
‘July saw the UK manufacturing sector suffocating under the choke-hold of slower global economic growth, political uncertainty and the unwinding of earlier Brexit stockpiling activity.’
GBP/SEK Exchange Rate Drops as UK Markets Brace for BoE Rate Decision
Sterling traders are feeling apprehensive ahead of the Bank of England’s interest rate decision today, which is expected to hold at 0.75%.
However, with no-deal Brexit fears running high as negotiations breakdown between the UK and the EU, many investors are expecting a dovish turn from the Governor of the BoE Mark Carney in his speech later on this afternoon.
Analysts at Reuters said:
‘[I]t is more probable that the central bank, which has in the past been accused by pro-Brexit campaigners of having an anti-Brexit bias, will instead tweak the financial market assumptions that go into its forecasts.’
The Pound is struggling against many of its competitors today as Brexit uncertainty and a combination of fears over the BoE’s potentially dovish stance are weighing on UK market sentiment.
GBP/SEK Outlook: No-Deal Brexit Fears to Hold Back Sterling’s Gains
Pound investors will be looking ahead to tomorrow’s publication of the UK Markit Construction PMI data for July, which is expected to remain in contraction territory.
Swedish Krona traders, meanwhile, will be focusing on developments within the European Union, as both Brexit and the bloc’s economic woes are continuing to weigh on Sweden’s economy.
The GBP/SEK exchange rate is likely to remain down, however, as the Pound is failing to lift as political uncertainties rise between the EU and the UK over the controversial Irish backstop.
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TAGS: Pound Sterling Forecasts