GBP/SEK Outlook:
The GBP/SEK rate is currently below its recent average and is positioned near recent lows, showing bearish tendencies. Added pressure comes from worsening UK employment data, which is increasing expectations for a Bank of England rate cut.
Key drivers:
• Rate gap: The Bank of England appears more likely to cut rates compared to the Riksbank, which is adopting a relatively steady approach.
• Risk/commodities: The continued volatility in commodity prices could weigh on the GBP, particularly if fears of slowing demand surface.
• One macro factor: UK unemployment has hit a five-year high, weakening the pound as it raises concerns about economic growth.
Range:
The GBP/SEK is likely to drift within its recent range as it approaches the lower end of the spectrum.
What could change it:
• Upside risk: A surprising improvement in UK inflation could bolster the GBP and shift expectations regarding the BoE's policies.
• Downside risk: Further weakening in economic indicators could lead traders to anticipate a more aggressive rate cut from the BoE, putting additional downward pressure on the GBP.
