The Pound Sterling (GBP) to Swedish Krona (SEK) exchange rate advanced to a one-week high on Wednesday after data showed that Sweden’s gross domestic product (GDP) rose less than forecast last month.
The Euro (EUR) also advanced to its highest level in a week against the Swedish currency.
According to the report published by Statistics Sweden the Scandinavian nation’s GDP increased at a quarterly rate of 0.2% in the second quarter. The figure disappointed economists who had been forecasting for an expansion of 0.6%. On an annual basis the economy expanded by 1.9%, well short of the expected rise to 2.4%.
Earlier in July the Swedish Central Bank the Riksbank said that it expected the country’s economy to have expanded by 2.4% in the last quarter. It also predicted that GDP would rise by 2.2% this year and by 3.3% in 2015.
Since the start of the financial crisis Sweden has outpaced the Eurozone but the ongoing weakness in the single currency region now seems to be having a negative effect upon the country as slow demand has impacted upon Swedish exports and caused unemployment to rise to a three year high of 9.2%.
Consumer prices have also dropped for five out of six months on a year on year basis.
Also weighing upon the Swedish Krona was the release of data earlier in the session which showed that both business and consumer confidence declined this month.
Business confidence fell from the 103.7 seen in June to 102.7 in July. Consumer confidence meanwhile dropped from 101.3 seen in June to 99.9 in July.
Euro Exchange Rate Forecast
Earlier in the session the Euro found support from better than expected GDP data out of Spain.
On a quarter on quarter basis Spains economy expanded by 0.6%, beating forecasts for a rise to 0.5% and up from the 0.4% seen in the previous quarter.
On an annual basis it improved from 0.5% to 1.2%.
The Euro could give up some of those gains and could drop against the Pound, US Dollar and other major peers if sentiment data out of the Eurozone and inflation data out of Germany come in worse than forecast.
The US Dollar is likely to make gains across the board as investors expect US GDP data to come in strongly. The Federal Reserve is also due to announce its interest rate decision in the evening.
Euro Exchange Rates
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