The GBP/SEK currency pair settled above recent low of 12.0898, its weakest level since September 28th 2022, as soft UK GDP growth added to Bank of England rate cut expectations.
Preliminary data by the Office for National Statistics showed UK’s GDP had expanded 0.1% quarter-on-quarter in Q4. Although the figure matched the previous quarter’s pace, it fell short of market consensus of a 0.2% growth.
And, in annual terms, GDP growth slowed to 1.0% in Q4 from 1.2% in the prior period.
Overall, the data implied the UK economy lost momentum toward the end of 2025, reinforcing concerns over fragile growth.
Markets are now pricing in a higher probability of an interest rate cut by the BoE as early as March.
Subdued activity and easing inflation risks are likely to provide the central bank with more room to act.
Meanwhile, in Sweden, annual inflation has accelerated to 0.4% in January from 0.3% in December, preliminary data showed.
And, Sweden’s consumer price index with a fixed interest rate (CPIF), Riksbank’s target variable for inflation, went up 2% year-on-year in January, easing from 2.1% YoY in December.
Riksbank left its key policy rate intact at 1.75% at its January meeting.
Policy makers again indicated that borrowing costs would likely remain at this level for some time, as they assess the impact of the current policy stance.
Still, Riksbank warned that uncertainty over inflation and growth had risen, driven in part by geopolitical tensions and shifts in US trade and foreign policy.
The exotic Forex pair lost 0.80% for the week.
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