Pound to Swedish Krona Exchange Rate Steadies after Yesterday’s Selloff
Yesterday saw the Pound Sterling to Swedish Krona (GBP/SEK) exchange rate tumble, as the Pound (GBP) fell back from its recent advance attempts. Today’s UK growth data had little impact on the pair, leaving markets awaiting Brexit developments.
Broad Swedish Krona (SEK) weakness made it easier for GBP/SEK to surge from 11.31 to 11.63 last week. At the beginning of this week, GBP/SEK even touched on a high of 11.71 – the best level for the pair in three months.
However, since Monday GBP/SEK has been tumbling again. GBP/SEK has lost around a third of last week’s impressive gains, and trends near the level of 11.53 at the time of writing.
Investors are hesitant to move on the Pound much today. UK growth was not hugely surprising, and markets are anxious about the final round of UK-EU Brexit negotiations.
Pound (GBP) Exchange Rates Weighed by Brexit Uncertainties and Gloomy UK Growth
While today’s UK Gross Domestic Product (GDP) report came in slightly stronger than expected, it was not enough to boost the Pound.
UK growth still saw huge contractions in Q2 2020, though the contractions were a little lighter than projected.
Instead, with the growth data published, Pound investors are turning attentions back towards the huge uncertainties of the Brexit process.
The UK government’s controversial Brexit plan, that gives the government the power to break the Brexit withdrawal agreement, passed through UK Parliament yesterday.
Markets are still expecting some kind of Brexit deal to be reached. However amid the final scheduled week of talks, uncertainty remains high and this is keeping the Pound under pressure.
Swedish Krona (SEK) Exchange Rates Recovering from Last Week’s Plummet
Last week saw the Swedish Krona fall broadly. Investors sold the currency due to a market selloff in risk-correlated currencies, combined with fears that a second wave of coronavirus cases was hitting Europe.
As Sweden has taken relatively lax measures to the coronavirus pandemic, concerns that a second wave could cause cases to surge in Sweden as well left Krona investors anxious.
Still, the currency is rebounding this week. The Swedish Krona has been able to recover from losses as investors return to risk-correlated currencies. According to Analysts at ING:
‘The Swedish Krona appears to be on a recovery path after last week’s losses, and today some domestic drivers may also play a role (although general market sentiment remains the primary driver).’
The Krona’s advances are limited though. Market risk-aversion persists due to uncertainties around last night’s US Presidential Debate.
Pound to Swedish Krona (GBP/SEK) Exchange Rate Focused on Brexit, Manufacturing Data
The primary focus for the Pound outlook over the next week or so will be the Brexit process.
Any signs of breakthrough or optimistic developments in UK-EU Brexit negotiations could lead to a surge in Pound demand. This could help GBP/SEK to recover some of this week’s losses.
On the other hand though, signs of talks collapsing or a higher chance of a no-deal Brexit could leave the Pound even weaker.
Asides from Brexit, upcoming manufacturing data could influence the Pound to Swedish Krona exchange rate.
Thursday’s European session will see the publication of Sweden and UK manufacturing PMI data for September. It will be the clearest idea yet on how the coronavirus pandemic has impacted economic activity as a second wave approaches.
The Pound to Swedish Krona (GBP/SEK) exchange rate will also continue to be influenced by market risk and trade sentiment.