Pound to Swedish Krona (GBP/SEK) Softer – Friday Forecast as Most Influential Day
The Pound has softened against a basket of other majors on Monday including the Swedish Krona (GBP/SEK) following weaker than expected UK domestic data. Sterling is currently trading at 11.7662 versus the Krona, reaching session highs of 11.8064 and lows of 11.7547.
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Monday saw the release of UK Mortgage Approvals figures which fell to a three-month low in August of only 64.2K, paling in comparison to July’s 66.6K and the forecast 65.0K. April saw changes to the Mortgage Market Review (MMR) process, which imposed harsher restrictions on mortgage leniency. Economic expert Martin Beck commented: ‘With approvals having nudged down for two successive months and other evidence… pointing to weaker demand, the housing market resurgence seems to be running out of legs.’
Furthermore, UK house prices have failed to increase as much as economists had expected, causing further speculation that the UK housing market is cooling. The Bank of England’s (BoE) Financial Policy Committee is due to publish their latest statement on Thursday. The last statement in June saw tightening in the MMR. However, many believe that this statement will see new developments in the government’s Help to Buy programme which offers support to property buyers.
Meanwhile, Sweden has adjusted rules for banks to have a greater transparency when it comes to new mortgages. State owned Swedish mortgage lender SBAB controls an estimated 7% of the Swedish mortgage market and has voiced its opposition to such a move. The bank suggests that the transparency will give a misrepresentation of rates as it confuses first time buyer figures with cross lender comparisons.
SBAB Chief Executive Klas Danielsson commented: ‘We will now have to start to publish our exact rates and will then be compared with our competitors only on the rate and that might not be right. We like transparency and should become even more customer-friendly—one can’t argue against transparency. But it’s very important that we compare apples with apples and don’t compare apples with pears.’
The goal of the rule change was to allow Swedish buyers achieve the best deal when committing to a property purchase. The Swedish Financial Supervisory Authority (FSA) commented: ‘For most people, purchasing a home and taking out a mortgage is the biggest transaction of their lives. But there is a lack of basic information today about what a loan costs because the banks do not report which interest rates they actually offer their customers. The current system makes it difficult for customers to compare banks or understand how interest rates are determined.’
The new transparency mortgage measures may allow homebuyers to feel more confident in purchasing and have an effect on the current property market in Sweden, which could bode well for the Krona.
Meanwhile, Swedish Retail Sales have bounced back rising by 1.9% in August from July, growing faster than expected. August’s data is the strongest recorded in almost 18 months, affected by Sweden’s largest trading partner, the struggling Eurozone. Speculation was circulating that the Swedish central bank may have to consider cutting their interest rates lower than the present historical low of 0.25%; however, August’s statistic alleviates some of that pressure. Economist Torbjorn Isaksson commented: ‘Swedish households are well off and we have continuing strong demand in the Swedish economy. It is hard to see what would turn that around. On the margin, this indicates the Riksbank [central bank] will not cut the repo rate again.’
Pound to Swedish Krona (GBP/SEK) Forecast
The Pound is likely to see movement from domestic data releases this week, such as final second quarter Gross Domestic Product (GDP) figures on Tuesday, Construction Purchasing Managers Index (PMI) on Thursday, and Composite and Services PMI on Friday. Meanwhile, the Swedish Krona is most likely to experience fluctuations on Friday as both Services PMI and Industrial Production figures are published. Swedish Industrial Production dipped to -5.7% in July on a yearly basis, with economists forecasting a more favourable -0.28% in August.