GBP/SEK: Investor's Cast Doubt On Sweden's Coronavirus Approach

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GBP/SEK: Investor’s Cast

Doubt On Sweden’s
Coronavirus Approach
By Fiona Cincotta 2nd April 2020

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.

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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.

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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

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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.

https://currencylive.com/news/102897-gbp-sek-investors-cast-doubt-
on-swedens-coronavirus-approach/

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