Swedish Krona couldn’t take advantage of upbeat GDP growth rate and close down on Friday close. On the currency market, during last week’s trading activity, Krona settled at 12.3812 up 0.05% against the Pound.
Last week’s trading session saw GBP/SEK within the range of 12.4497 -12.254. However, during the early Asia trading hours, the GBP/SEK exchange rate was seen quoted unchanged near last week’s closing rate.
Sweden’s economic activity grew at a faster pace than the market has anticipated. During the third quarter of 2019, Sweden’s Gross Domestic Product grew by 0.3% versus 0.2% forecasted figure. On the other hand, the annualized GDP rate expanded by 1.6% versus 1.9% forecasted figure.
The acceleration in the Sweden economy can encourage Riksbank’s intention to hike interest rates at its next policy meeting. Sweden central bank plans to exit the negative interest rate policy during its last policy meeting of the year on 19 December.
Sweden’s economic downturn during the first half of the year was driven in part by a correction in the housing market, sluggish labor market and export growth. Compared to the 2.4% growth rate seen in prior year, this year’s growth rate is expected to be the lowest that the Sweden economy has seen in the past six years.
Many Wall Street analysts, however, believe that the economic slowdown will continue to persist going into 2020. Most GDP forecasts are very pessimistic and only see 1.3% growth rate.
Riksbank strategy is to keep interest rate policy unchanged after they deliver the “promised” December rate hike. With the Fed and the ECB delivering more easing measures, it’s hard to see the Sweden central bank getting out of sync with the major central banks around the world.
Looking over the economic calendar we have some manufacturing PMI data from both the UK and EU, which can generate some volatility for the currency of the export driven economy of Sweden.