Better-than-expected Swedish inflation growth prompted Danske Bank analysts to predict that Riksbank will hold the overnight cash rate next week.
The British pound has tanked against its competitors today, owing to continued negative sentiment regarding the GBP’s future.
The near-future may bring a recovery for GBP against its competitors, as investor sentiment fades. It is currently in a highly negative state, due to the UK Referendum’s implications worrying supporters of Sterling considerably.
Markets were not overly encouraged by the Bank of England’s (BoE) latest meeting minutes, as policymakers continued to stress the negative impacts of recent uncertainty on the domestic economy.
The BoE also indicated that it will tread cautiously ahead of June’s referendum, strongly implying that interest rates will remain on hold for the foreseeable future.
The Pound has stayed positive against its Northern economic neighbours today, thanks to events in the House of Commons
While Prime Minister’s Questions today failed to result in any decisive commitments for the UK government, the event nonetheless boosted the Pound due to its focus on a pressing issue.
The matter at hand was the ‘Panama Papers’, which appear to have galvanised the government into action.
While Brent crude prices rallied in response to a stronger-than-expected Chinese exports figure the Norwegian Krone (NOK) failed to regain any particular momentum against rivals, pushing the GBP/NOK exchange rate higher.
Demand for the Pound (GBP) increased in spite of a lack of UK data to drive sentiment on Wednesday, as markets were buoyed by a general increase in bullish sentiment.
Despite ongoing political uncertainty regarding the EU referendum weighing on sentiment towards Sterling, GBP exchange rates climbed recently thanks to better-than-expected inflationary growth.
Similarly, improving inflation in Sweden allowed the Krona to advance versus many of its peers thanks to renewed speculation that the central bank will avoid easing monetary policy further.
The Norwegian Krone has also posted marked gains recently thanks to rising crude oil prices amid hopes of a production freeze agreement between Saudi Arabia and Russia.
For your reference, here are the latest FX rates:
On Friday the Swedish Krona to British Pound exchange rate (SEK/GBP) converts at 0.074
The GBP to SEK exchange rate converts at 13.565 today.
Today finds the pound to norwegian krone spot exchange rate priced at 13.632.
At time of writing the pound to danish krone exchange rate is quoted at 8.694.
NB: the forex rates mentioned above, revised as of 3rd May 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.
Swedish Krona (SEK) exchange rates predicted to improve amid heightened demand for Swedish government bonds.
Yesterday the Swedish Financial Services Authority (FCA) published a statement that the Swedish Krona ought to be considered a major currency for Liquidity Coverage Ratio purposes for banks. Changing the Krona to a major currency would see a new rule implemented by which the banks have to be 100% compliant in SEK. As a result, demand for government bonds is expected to heighten significantly.
The Krona also enjoyed a boost thanks to better-than-expected inflation in March. This resulted in many analysts expecting Riksbank to avoid easing policy further next week.
‘EUR/SEK fell sharply on Tuesday following the higher-than-expected March inflation data. The data only make us more confident that the Riksbank will stay put next week. We still see EUR/SEK in a broad 9.10-9.50 range but clearly with the bias shifting to the lower end of the range. Near-term psychological support comes in at 9.15 ahead of the low from 30 December last year at 9.1220, which was the day when the Riksbank issued a statement warning against SEK strength. A break through 9.15 could trigger verbal intervention from the Riksbank again protecting the downside.’
Norwegian Krone Cools from Yesterday’s Highs as Crude Oil Prices Resume Depreciation
In the aftermath of news that Saudi Arabia and Russia agreed terms for a crude oil production freeze, the price of ‘black-gold’ advanced to its highest level in 2016. The Norwegian Krone strengthened considerably as it tracked crude oil price gains.
However, on Wednesday the price of crude slipped from yesterday’s highs thanks to weak Asian cues and trader profit-taking. As a result, the Krone softened versus a number of its major peers.
With a complete absence of domestic data until Friday, the Krone is expected to continue to trend in response to crude oil prices.
Pound Sterling (GBP) Exchange Rates Advance on Improving UK Inflation but Political Uncertainty Limits GBP Appeal
Yesterday the UK Pound appreciated thanks to better-than-expected inflationary growth in March.
The Pound managed to add to gains today despite a complete absence of domestic data to provoke volatility.
Although the improvement in the UK’s inflation is likely to reduce the potential for Bank of England (BoE) policy easing, the UK asset still has a limited appeal thanks to political uncertainty.
Not only has the EU referendum and the steel crisis weighed massively on political uncertainty, but the latest developments with the ‘Panama Papers’ has divided politicians. There are increased calls from opposition MP’s for Prime Minister David Cameron’s resignation after the revelation that his late father had offshore accounts.