GBP/SEK Outlook:
Bearish, as the rate remains below its recent average and is nearing recent lows, influenced by ongoing UK political uncertainty.
Key drivers:
• Rate gap: The Bank of England's dovish stance with steady interest rates contrasts with Sweden’s slightly accommodative monetary policy, making GBP less attractive.
• Risk/commodities: Oil prices have recently stabilized, but any fluctuations could impact the SEK, especially given Sweden's greater reliance on energy exports.
• One macro factor: Mixed economic indicators from the UK, including rising inflation and modest retail sales growth, create uncertainty for the GBP's direction.
Range:
Expect GBP/SEK to drift within its recent 3-month range, as current pressures limit significant movement.
What could change it:
• Upside risk: A sudden positive development in UK politics or a shift towards more aggressive monetary policy by the BoE could lift the GBP.
• Downside risk: Continued political instability or disappointing economic data from the UK might further weaken the pound against the SEK.
