Pound to Swedish Krona Exchange Rate Slumps as BoE Turns Dovish

Pound Slips as BoE Downgrades Growth Forecasts and Predicts Wage Squeeze

The Pound has fallen sharply against the Swedish Krona today, from an opening exchange rate of 11.54 to the latest lows of 11.41.

Bank of England (BoE) announcements have triggered this decline, with the BoE interest rate decision starting off the day’s disappointment.

While the rate freeze at 0.25% matched forecasts, traders were disappointed that only one policymaker voted for a rate hike.

Additional concern was caused by BoE’s forecasts for a clear wage squeeze on UK consumers due to rising inflation. While the central bank did predict rising wages in coming years, estimates of almost 3% inflation in 2017 did little to reassure traders.

An expectation that interest rates could rise sooner than expected failed to inspire Pound trading, given that this could still leave the earliest rate hike date as 2019.

Next week’s UK data will include the main issues in the BoE’s reports – inflation and wages. Tuesday’s April inflation rate could raise Pound demand if it rises, while falling wage growth on Wednesday could conversely weaken GBP.

Wednesday will also see March’s unemployment rate announced. If this drops below February’s 4.7%, the Pound may advance against the Krona.

Swedish Krona to Pound Exchange Rate Soars on Near-Target Inflation

The Swedish Krona’s recent advance follows forecast-beating inflation rate figures.

In April, annual inflation rose from 1.3% to 1.9%, while the monthly figure increased from 0% to 0.6%. The yearly rise puts inflation just below the Riksbank target of 2%, which raises the chances of an interest rate hike.
According to recent Riksbank minutes, the Swedish central bank is looking at ways to keep inflation on-target, which could lead to an ‘expansionary monetary policy’. Policymakers were of the opinion that;

‘Economic activity continues to strengthen, but the political situation abroad is creating risks to economic development. It was noted that developments in the Euro area have been positive but that inflationary pressures there are still low and that the ECB will continue to pursue a very expansionary monetary policy in the foreseeable future’.

Next week’s main Swedish news will be unemployment rate figures on Tuesday and confidence stats on Wednesday.

Swedish unemployment dropped from 7.4% to 6.8% in March, so if April’s result falls further then the Krona could advance against the Pound.

Wednesday’s news, business and consumer confidence stats for May, could similarly boost SEK demand if they show continued steady growth.