The GBP/SEK currency pair edged lower on Wednesday following the latest UK inflation data and ahead of the outcome of the Bank of England’s and Sweden’s Riksbank policy meetings.
The Bank of England is expected to lower its benchmark interest rate by 25 basis points to 3.75% at its December 18th meeting.
In November, the BoE left borrowing costs without change at 4%, while four policy makers voted in favor of a 25 basis point rate cut to 3.75%.
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 had 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.
The latest UK inflation figures came in below market expectations, supporting the BoE rate cut case. UK’s CPI rose 3.2% year-over-year in November, compared with a forecast of 3.5%.
Core CPI also rose 3.2% year-over-year, versus expectations of 3.4%.
Meanwhile, Riksbank is expected to leave its key policy rate intact at 1.75% at its December 18th meeting.
In November, 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.
The GBP/SEK currency pair was last down 0.25% on the day to trade at 12.4496.
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