Swedish Krona to Pound Sterling (SEK/GBP) Exchange Rate at two-week high on positive data

The Swedish Krona strengthened to its highest-level since April 16th against the Pound on Monday following the release of better-than-expected retail sales data.

According to Statistics Sweden retail sales increased sharply in March. Annual Sales rose by 5.1% in March; the largest rise recorded in three years and was better than economist forecasts for a rise of 2.7%. Month on month sales rose by 1.1%. The report also showed that Swedish exports increased by 1% in the first quarter of 2014 compared to the same time in 2013 and imports advanced by 3%.

Investors greeted the unexpected data with optimism sending the SEK higher against the Pound and Euro as a result. The data adds to a growing sense that the Nordic economy is improving and adds to recent GDP data, sentiment surveys and PMI reports which have all come in positively over the past few weeks.

The Swedish finance ministry now expects the Swedish output to grow by 2.7% this year up from the 1.5% rise seen last year.

Inflation continues to be an issue for the Swedish economy and some economists have called on the nation’s Central Bank the Riksbank to take more action to stave off the threat from possible deflation. Pressure is building on the bank to cut interest rates. Most analysts think the Riksbank will lower its benchmark interest rate to 0.5% from 0.75% at its next meeting in July.

Sterling meanwhile was supported against most major peers but pared its gains against the US Dollar following the release of positive US pending home sales data. The currency remains supported from expectations that the Bank of England will increase interest rates early next year. Against the SEK the Pound is expected to reverse today’s losses if tomorrow’s UK GDP data comes in strongly as forecast.