The GBP/SEK currency pair settled below Friday’s high of 12.5814, its strongest level since October 22nd, in the wake of the Bank of England’s and Sweden’s Riksbank policy decisions.
The Bank of England left its benchmark interest rate without change at 4% at its November 6th meeting, in line with market expectations.
Four policy makers voted in favor of a 25 basis point rate cut to 3.75%, reflecting increasing support for easing.
BoE policy makers acknowledged that UK CPI inflation had peaked and underlying disinflation had shown progress.
A subdued economy and rising labor market slack were also factors supporting disinflation, the BoE said.
Policy makers also noted risks over achieving the 2% inflation target were now more evenly balanced. Persistent inflation has become a lesser concern, while downside risks from weak demand have risen.
In case disinflation continues as anticipated, the bank rate will likely move lower at gradual pace.
Meanwhile, Sweden’s central bank left its key policy rate intact at 1.75% at its November 5th meeting, in line with market consensus.
Policy makers signaled that borrowing costs would likely remain at this level for some time.
Inflation continues to be above the central bank’s 2% medium-term target. Yet, it has eased broadly in line with the September projection, solidifying the view that the current price pressures are temporary.
GDP growth was slightly stronger than expected in the third quarter, but the labor market still showed signs of weakness, the central bank said.
The exotic Forex pair gained 0.44% for the week.
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