October 5, 2020 - Written by John Cameron
STORY LINK Pound Swedish Krona (GBP/SEK) Exchange Rate Rangebound as Concerns Grow Over Sweden’s Economy
GBP/SEK Exchange Rate Steady as Sweden’s Economic Slump ‘Won’t Be Over Until 2023’
The Pound to Swedish Krona (GBP/SEK) exchange rate held steady today, with the pairing currently trading around 11.546kr.
The Swedish Krona (SEK) held steady today despite news that Sweden’s economy could shrink less-than-expected in 2020.
According to the National Institute of Economic Research, the economy would shrink by 3.4% instead of August’s forecast of a 4.8% shrinkage.
Ylva Hedén Westerdahl, the National Institute of Economic Research’s Forecast Chief, commented:
‘We are now seeing clear signs that there will be a strong rebound during the third quarter of this year.’
However, Westerdahl was also downbeat, saying:
‘It will take time before we are back to normal levels. The slump won't be over until 2023. The recovery that we're seeing is fragile.’
Swedish Krona (SEK) investors are also worried that the final months of 2020 could severely compromise the economy.
Pound (GBP) Steady as Brexit Uncertainty Remains
Sterling is rangebound against the Swedish Krona today as Brexit uncertainty continues following this weekend’s video conference between Prime Minister Boris Johnson and the European Commission’s President Ursula von der Leyen.
Boris Johnson said that the UK would survive without a UK-EU trade deal, sparking concerns that Downing Street appears so unfazed by the possibility of a hard-Brexit later this year.
Today saw the release of the latest UK Services PMI for September. The gauge beat forecasts rising from 55.1 to 56.1.
Chris Williamson, the Chief Business Economist at IHS Markit, commented on the report:
‘The UK service sector showed encouraging resilience in September, with business activity continuing to grow solidly despite the government’s Eat Out to Help Out scheme being withdrawn.’
In other UK economic data, this evening will see the publication of the latest BRC Retail Sales report for September. If this shows a marked downturn in the UK’s retail sector, then GBP would suffer.
GBP/SEK Outlook: Lack of Brexit Progress Could Drag Down Sterling
Swedish Krona (SEK) investors will be awaiting tomorrow’s release of the latest Swedish industrial and manufacturing value and orders figures.
Any improvement in Sweden’s economy would bolster confidence in the Swedish currency.
GBP traders will be looking ahead to tomorrow’s release of September’s UK Markit Construction PMI.
Any indications of a flagging UK construction sector would prove GBP-negative.
The GBP/SEK exchange rate could remain subdued this week if Brexit uncertainty continues to haunt UK markets. If there is a general lack of progress in UK-EU Brexit debates, however, we could see Sterling begin to fall.
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TAGS: Pound Sterling Forecasts