May 11, 2020 - Written by John Cameron
STORY LINK Pound to Swedish Krona (GBP/SEK) Exchange Rate Steady as Swedish Economy Faces ‘Unprecedented Declines’
GBP/SEK Exchange Rate Rangebound as Sweden Fails to Benefit from No-Lockdown Approach
The Pound to Swedish Krona (GBP/SEK) exchange rate held steady today following news that Sweden is unlikely to benefit from its no-lockdown approach to tackling the coronavirus. The pairing is currently trading around 12.130kr.
Christina Nyman, former deputy head of monetary policy at Riksbank, commented:
‘It is too early to say that we would do better than others. In the end, we think Sweden will end up more or less the same.’
While David Oxley, the Senior Europe economist at Capital Economics, described economic activity in Sweden as ‘grim’ and facing ‘unprecedented declines’.
As a result, the Swedish Krona (SEK) has remained subdued today despite many schools and shops being opening throughout the peak of the coronavirus crisis. However, due to many businesses being shuttered and workers being laid off, this has since dragged on the Swedish economy.
Moreover, the Swedish government has projected a possible shrinkage of -7% in the Swedish GDP this year. Though the Riksbank said the dip could be as large as -10%, which would equal the worst year since the beginning of World War Two.
Pound (GBP) Falls as UK Lockdown Speech Sparks ‘Considerable Confusion’
The Pound (GBP) struggled today after Labour leader Keir Starmer echoed UK investor sentiment by saying Prime Minister Boris Johnson’s lockdown easing speech had caused ‘considerable confusion’.
As a result, the Pound (GBP) has suffered on rising uncertainty on how the UK will continue to tackle the coronavirus.
Richard Burge, the Chief Executive of London Chamber of Commerce, commented:
‘We hope that the statement in parliament and the promised guidance documents will enable business to prepare. At the moment, it would be foolish for any business leader to encourage staff not already undertaking essential work to do anything but to continue to work from home tomorrow if they can do so.’
Meanwhile, Sterling has also suffered from a gloomy statement from the Bank of England (BoE) over the weekend, which pointed out that the UK could suffer its biggest financial crash in 300-years.
Consequently, the Pound (GBP) has suffered from a lack of confidence in the UK’s economic recovery, with fears rising over the Government’s handling of the crisis.
GBP/SEK Forecast: Could the Swedish Krona Rise as Sweden’s Covid-19 Situation Plateaus?
Pound (GBP) traders will be awaiting tomorrow’s UK BRC Like-For-Like Retail Sales report for April. However, with retail sales set to plunge due to the coronavirus it is likely we’ll see the Sterling’s gains compromised.
Meanwhile, Sterling investors will also be keeping a close eye on the UK’s coronavirus developments. If there are any signs of an increase of infections over the course of this week, then we could see the GBP suffer as its economic outlook remains uncertain.
Swedish Krona (SEK) traders will be keeping a close eye on Sweden’s coronavirus situation. However, if Sweden continues to re-open its economy, and the death toll eases, then we could see the Swedish Krona begin to rise against the Pound.
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TAGS: Pound Sterling Forecasts