The GBP/SEK currency pair settled below recent high of 12.5019, its strongest level since December 9th, in the wake of the Bank of England’s and Sweden’s Riksbank policy decisions.
The BoE reduced its benchmark interest rate by 25 basis points to 3.75%, in line with broad expectations.
Still, the policy decision revealed significant internal disagreement, with a 5-4 vote on the Monetary Policy Committee. Four members favored keeping the rate unchanged at 4.00%, highlighting ongoing divergence over the appropriate pace of easing.
In its Monetary Policy Summary, the BoE said the scale of any additional rate reductions would depend on how the inflation outlook develops.
The central bank also noted that the overall degree of policy restriction had already lessened following a total of 150 basis points of cuts since August 2024.
While officials still see room for more rate cuts over time, they warned that subsequent decisions on easing were becoming a “closer call.”
Meanwhile, Sweden’s central bank left its key policy rate intact at 1.75% at its December meeting, in line with market consensus.
Policy makers again indicated that borrowing costs would likely remain at this level for some time.
The Riksbank noted that economic prospects had improved, while inflation was approaching the 2% target.
The central bank has revised up its GDP growth forecast for 2026 to 2.9%, while CPIF is forecast to ease to 0.9% in 2026 before moving up towards 2% in 2027.
The exotic Forex pair gained 0.15% for the week.
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