The Swedish Krona is extending losses in early trade.
On Wednesday the Pound versus Swedish Krona exchange rate dropped 0.8% to close at 12.4063, as investors digested worse than forecast manufacturing activity data and as figures cast serious doubts over Sweden’s “herd mentality” approach to coronavirus.
At 06:45 UTC, GBP/SEK is trading 0.6% at 12.4260, after spiking to a high of 12.4809 overnight.
Herd Immunity Questioned By Investors
Different countries across the globe are adopting different approaches to coronavirus. Sweden is now one of the only Western countries that is leaving its shopping centres, restaurants, schools and ski resorts open, in a business as usual approach. The aim is to boost “herd immunity”.
However, early results are showing that death toll is rising at an aggressive 25% per day or doubling every 2 /3 days. Market participants are casting doubt over the approach being adopted with many believing that this will turn out to be a colossal mistake for the population and the economy. These fears are weighing heavily on the Krona.
Despite little in the way of social distancing measures, the manufacturing sector deteriorated the most in 25 years in March as the coronavirus pandemic had a severe impact on industry as demand from European trading partners evaporates.
Data from Swedbank showed that the manufacturing purchasing managers index (PMI) dropped to 43.2 in March from 52.7 in February. The figure 50 separates expansion from contraction.
Today investors will continue to monitor coronavirus numbers closely for further clues as to whether “herd immunity” is working. Investors will also look ahead to Friday’s service sector PMI which is expected to show a decline to 47 from 56.7 as coronavirus nerves keep some of Sweden in their homes.
Pound Advances Awaiting Next Catalyst
The Pound traded broadly mixed in the previous session as investors focused on the escalation in coronavirus cases and the impact that the virus was having on the economy.
Data showed that over 1 million people have signed up for the main benefit, universal credit, since Boris Johnson advised the British public stay at home two weeks ago. This is 10 time greater than usual and gives an indication as to the surge in unemployment which is expected in the coming weeks and months.
There is no UK economic data today. Investors will be fixed on coronavirus figures after the UK’s death toll increased by 563 to 2352.
