GBP/SEK: Swedish Krona Advances Ahead Of PMI Data, Brexit Talks

The pound tumbled sharply lower versus the Swedish krona across the latter part of last week. The pound to Swedish krona lost 2.35% in its second straight week of losses. The pair struck a six-week low on Friday of 12.2987, before closing at 12.3034.

GBP/SEK has lost ground is early trading at the start of the new week. At 07:15 UTC the pair is trading at 12.2769.

SEK Firms Despite Coronavirus Clouding Growth Prospects

The Swedish krona pushed higher versus the weaker pound on Friday even after data showed that Swedish economic growth slowed. Fourth quarter GDP increased 0.2% quarter on quarter and 0.8% year on year, in line with expectation. The data supports the Riksbank’s forecasts the Swedish economy is entering a period of calm after several years of strong growth. However, the outlook is clouded by the coronavirus outbreak, which could have a significant impact on the exporter nation amid supply chain issues and lower global demand.

At the most recent Riksbank meeting in February, the central bank kept rates on hold at 0%, which it intends to keep unchanged over the coming years. However, should the economy start to show signs of slowing, like fellow exporter nation Germany then an easing of policy could be required.

Manufacturing data will be in focus on Monday. Analysts are expecting manufacturing PMI to slip to 51 in February, down from 51.5 the previous month.

EU – UK Trade Talks & PMI Data In Focus

The pound has been one of the few global currencies to ignore coronavirus, instead sterling has been driven by fiscal policy expectations with the upcoming budget and by EU – UK trade talk expectations.

The pound plunged last week after Prime Minister Boris Johnson hardened his stance ahead of EU UK trade negotiations starting today. Boris Johnson warned that the UK would walk away from talks in June if insufficient progress had been made. This raised the prospect of the UK leaving the transition period on 31^st December on World Trade Organization rules. EU Chief negotiator Michel Barnier saying that talks would be “very difficult” served to dampen sentiment further.

Today investors will be watching trade talk headlines closely. UK manufacturing PMI numbers will also be under the spotlight. Analysts are expecting activity on the sector to remain steady at 51.9.

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