GBP-SEK

GBP/SEK is the ticker symbol for the British Pound to Swedish Krona exchange rate on the Forex market. Put simply, the GBP/SEK (British Pound/Swedish Krona) tracks how much the pound is worth against the Swedish Krona.

The GBP/SEK  is a particularly interesting cross and a highly liquid exotic pair as the UK is one of the top five trade partners of Sweden. On the flipside, Sweden is also an export-oriented economy whose main industries include telecommunications equipment, paper products, iron, and steel.

GBP/SEK Trading History

As previously mentioned, the GBP/SEK pair combines two countries which are both highly active in global trade. The pound is the currency of the UK – a crucial center of global finance. As the 4th most actively traded currency in the foreign exchange market, the sterling is also one of the world’s major reserve currencies. Meanwhile, Sweden is heavily invested in foreign trade, utilizing its rich natural resources in timber, hydro power, and iron ore. Having achieved an enviable standard of living, due to high-tech capitalism, extensive social benefits, a modern distribution system, and a highly skilled labor force, Sweden is the world’s 11th largest economy with an estimated GDP of $1.7 trillion in 2021.

The British pound as a currency has its origins in continental Europe under the Roman era. The pound’s name is derived from the Latin word “poundus” meaning “weight”, while the “£” symbol comes from an ornate “L” in Libra. The pound first became a unit of currency in 775AD in Anglo-Saxon England and was equivalent to 1 pound weight of silver.

The Swedish krona (SEK) was introduced in 1873, replacing the Riksdaler at par. The symbol of the currency is kr.  In English, the currency is sometimes referred to as the Swedish crown (as ‘krona’ means ‘crown’ in Swedish). The krona was first introduced as a result of the Scandinavian Monetary Union with Norway and Denmark, which lasted until World War I. Like all currencies under the treaty, the SEK was originally under the gold standard and it remained tied to gold at a fixed rate for about forty years until the outbreak of World War I.

It is important to note that despite Sweden being part of the European Union, the nation has refused to adopt the euro (EUR). On September 14, 2003, 56% of a high turnout of voters rejected adopting the Euro.

GBP/SEK Trading – Highs and Lows

The GBP had experienced major crashes starting World War I, when the British government was forced to devalue the pound considerably. A significant drop in the value of the pound also came with the outbreak of WWII which led the British government to peg the value of the pound to the dollar.

In 2008, the Lehman Brothers demise triggered the global financial crisis pushing the GBP/SEK lower. Later in 2013, the pair recorded a historic low when the UK lost its top AAA credit rating for the first time since 1978, after being downgraded by the ratings agency Moody’s. In September 2022, and amid increasing inflationary pressures, the Swedish krona hit an all-time low against a robust US dollar to trade at 0.090 dollars.

Why Trade GBP/SEK?

While the GBP/SEK is considered an exotic pair and hence less volatile than its major rivals, such as the euro (EUR/USD) and yen (USD/JPY), it can nonetheless offer high liquidity during its peak trading hours and can provide a number of trading opportunities. What is more, rising tensions in the EU area combined with record-high inflation figures in the UK and Sweden, have caused the pair to become significantly more volatile in recent years.

Major Data Influencing GBP/SEK

Here are some of the factors to look out for when trading the GBP/SEK:

Central Bank Monetary Policy

When corresponding central banks like the BoE (Bank of England) or the Sveriges Riksbank (Sweden’s central bank) make changes to their monetary policy, for example, by hiking key interest rates, this can affect the price GBP/SEK. Keeping an eye out for major Central Bank announcements can help traders better gauge the pair’s future performance.

Commodity Markets and Supply Chain Disruptions

Price movements in commodity markets linked to Sweden’s economy and exports, and specifically iron and steel are inextricably tied to the performance of the Swedish krona and, by extension, the value of the GBP/SEK pair.

Economic Data Releases

Economic releases including local CPI (inflation) data, employment data, gross domestic product (GDP), retails sales, purchasing managers index (PMI) and others can have a major impact on their respective currency’s price action.

Politics

Major political events can cause huge movements in a currency as we saw by the collapse of the British pound’s value after the UK’s vote to leave the EU and the subsequent Brexit. Government elections and a change in political parties in both the UK and Sweden can also have a huge impact on the GBP/SEK price.

GBP/SEK Correlations

Mainly, GBP/SEK currency pair is heavily affected by the correlation between the United Kingdom and Sweden and their trade relations. As previously noted, the krona is also positively correlated with iron and steel prices, and when these move higher, the GBP/SEK pair will likely drop as the SEK appreciates.

Day Trading the GBP/SEK Pair

The GBP/SEK forex pair offers traders a variety of short- and long-term opportunities – and while the forex market is open 24 hours a day, 5 days a week – the best times to trade the GBP/SEK are during London market hours, or between the hours of 8 am and 5 pm GMT.

GBP/SEK Volume and Volatility

As previously noted, there are specific times when certain pairs are most volatile. Significant movement in the GBP/SEK usually occurs when the European trade session opens. This is between 08:00 to 17:00 GMT. However, volatility can also be expected during the UK’s and Sweden’s economic data releases, which typically occur between 07:00 to 10:30 GMT.

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