The Pound to Swedish Krona (GBP/SEK) exchange rate strengthened to its best level in 2-weeks on Monday after the weekends Swedish General Election resulted in a hung parliament.
‘The Krona has weakened in response to the Swedish election result. The market’s concern is over the time it may take for a government to be formed, but we would highlight that the current weak levels of the Krona limit the scope for a selloff,’ said Steven Saywell an analyst from BNP Paribas.
The three-party Social Democratic opposition led by Stefan Loefvenwon 43.7%, versus 39.3% for the four-party government of Prime Minister Reinfeldt with all the votes counted. The Sweden Democrats meanwhile won 12.9% of the vote making them the nation’s third largest political group.
Economists were unhappy that the election resulted in the ousting of Sweden’s previous coalition government led by Fredrik Reinfeldt. That government had successfully steered the Scandinavian nation throughout the worst of the global economic crisis.
Hung parliaments are never seen as a positive by the markets due to the uncertainty such an outcome creates. Observers are now expecting the left-wing Social Democrats to form a weak minority government, as it looks unlikely that they will try to form a coalition with the far-right Sweden Democrats.
We have a new unique parliamentary situation in Sweden,” Loefven said at an election-night party. Adding to concerns that any new government will be a weak one was confirmed after he vowed to keep the Sweden Democrats from influence, opening the doors to government parties to “put the interest of Sweden first.”
The rise in support for the far right will be worrying for the European Union, as over the past year support for anti-immigration political groups has increased sharply. In Germany, the anti-EU party the Alternative for Germany also made gains in regional elections and support for UKIP in the UK and the National Front in France is on the rise.
Pound Sterling to Swedish Krona Exchange Rate Forecast
Sterling meanwhile is likely to remain under pressure until Thursday when the outcome of another vote could have a significant impact upon the economic markets.
Scottish voters take to the polls on September 18. A victory for the pro-independence ‘yes’ campaign could send the Pound tumbling by as much as 10% against its peers.
With no more market, moving economic data due out of Sweden this week the GBP/SEK exchange rate will all depend on whether a coalition government can be formed in Sweden and the outcome of the Scottish vote.
Swedish Krona (SEK) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,Swedish Krona,11.6128 ,
Euro,,Swedish Krona,9.2286 ,
US Dollar,,Swedish krona,7.1415 ,
[/table]
