GBP/SEK eases from 2-week high with focus on BoE

The GBP/SEK currency pair pulled back from a 2-week high of 12.2624 on Tuesday ahead of the outcome of the Bank of England’s policy meeting.

The Bank of England is expected to leave its benchmark interest rate intact at 3.75% at its February 5th meeting.

In December, the BoE reduced its policy rate by 25 basis points in a decision that revealed significant internal disagreement, with a 5-4 vote on the Monetary Policy Committee.

Four MPC members favored keeping the rate unchanged at 4.00%, highlighting ongoing divergence over the appropriate pace of easing.

The BoE had said that policy settings would follow a gradual downward trajectory rather than a sharp easing move. It said the scale of any additional rate reductions would depend on how the inflation outlook develops.

Inflation in the UK has remained well above the BoE’s 2% target, even after moderating in recent months. Headline Consumer Price Index rose 0.4% month-on-month in December, after a 0.2% drop in November. On a year-on-year basis, headline CPI picked up to 3.4% from 3.2%. And, core CPI inflation remained stable at 3.2%.

While BoE officials still saw room for more rate cuts over time, they warned that subsequent decisions on easing were becoming a “closer call.”

In Sweden, the manufacturing sector registered the strongest expansion since March 2022 in January, new data showed. The Swedbank Manufacturing PMI came in at 56.0 in January, up from 55.4 in December.

The GBP/SEK currency pair was last down 0.18% on the day to trade at 12.2242.