GBP/SEK settles below 1-week high, posts weekly gain

The GBP/SEK currency pair settled below Friday’s high of 12.9358, its strongest level since May 2nd, in the wake of the Bank of England’s and Sweden’s Riksbank policy decisions.

The Bank of England lowered its benchmark interest rate by 25 basis points to 4.25% at its May policy meeting, in line with market expectations.

Two MPC members voted in favor of a larger, 50 bps rate cut, while two other members opted to hold rates at 4.5%.

According to Governor Andrew Bailey, the Committee had room to reduce interest rates due to the ongoing moderation of inflationary pressures. He explained that the preceding weeks had illustrated the global economy’s unpredictable nature, which is why a “gradual and careful approach” was necessary when it came to rate cuts.

Despite that underlying growth remained at a mere 0.1% on quarter, the BoE raised its full-year growth forecast from 0.75% to 1%, attributing the estimate to a better-than-anticipated Q1.

And, inflation is projected to accelerate to as high as 3.5% in Q3 before easing.

In the meantime, Sweden’s Riksbank left its key policy rate intact at 2.25% at its May meeting, highlighting increased global uncertainty, especially after a shift in US trade policy.

The global macro environment has led to a slightly weaker Swedish economic outlook compared to March amid decreasing household confidence and early signs of heightening corporate pessimism.

Riksbank’s Executive Board said it was more likely that inflation will ease below the March projection. Back then, policy makers had said they expected inflation would remain above the 2% target for the rest of 2025 before stabilizing near that level in 2026.

The GBP/SEK currency pair settled 0.22% higher at 12.9219 on Friday.

The exotic Forex pair gained 0.82% for the week.