Recent developments across European currencies highlight diverging trends and market dynamics. In Sweden, Societe Generale’s Kit Juckes notes that despite robust economic growth and low inflation—core CPI inflation at 0.4% year-on-year and monthly GDP up 3.9% year-on-year—the Swedish Krona (SEK) remains weak. The Krona is 6% above its 2023 lows in real effective terms but has depreciated 18% over the past 20 years. Juckes suggests that Sweden’s economic outperformance relative to the Eurozone will eventually attract capital inflows and impact inflation, although for now, the currency remains soft against the Euro and Pound [3]. ING also observes muted price pressures in Sweden, with headline CPIF at 1.3% and CPIF excluding energy at 0.4%. The effect of food VAT cuts is visible, and EUR/SEK may linger above 11.00 for longer before starting a gradual decline later in the year, primarily due to expectations of dovish repricing in the Fed curve [1].
Turning to the Euro, ING’s Francesco Pesole discusses resilience in the face of French political developments, including Marine Le Pen’s announcement to run in the 2027 presidential election following a court decision. Despite potential risks of fiscal stress in French government bonds (OATs) during the campaign, ING does not embed any political premium in EUR forecasts, as markets are likely already pricing in an RN win in April. Risks remain tilted to the downside for EUR/USD in the near term, with a move below 1.140 still possible this week. The eurozone data calendar is empty, and ECB speakers are expected to have limited market impact [1].
In Poland, ING’s Frantisek Taborsky expects the National Bank of Poland (NBP) to keep rates unchanged at 3.75% through year-end, with easing delayed until policymakers gain confidence in the inflation outlook. The July macroeconomic projection is likely to present a favorable medium-term inflation outlook, but policymakers will need several months to confirm the economy is avoiding lagged inflation effects. The market is pricing in around 10bp of rate cuts, and the narrowing rate differential, stronger US dollar, and recent EUR/PLN gains toward 4.29–4.30 have pressured the zloty, which has underperformed CEE peers. Potential rate-cut signals could create further upside for EUR/PLN as the debate intensifies after summer [2].
According to ING, Swedish inflation and EUR/SEK dynamics are also in focus, with muted price pressures and expectations for the currency to remain above 11.00 before a gradual decline [1]. Societe Generale, however, emphasizes Sweden’s strong growth and debt sustainability, expecting eventual capital inflows to support the Krona [3].
CONCLUSION
European currencies are experiencing varied pressures: the Swedish Krona remains weak despite strong growth and low inflation, the Euro faces downside risks amid French political developments but shows resilience, and the Polish Zloty is pressured by dovish central bank signals and a narrowing rate differential. Market sentiment is cautious, with analysts expecting further debate and potential shifts in monetary policy to drive currency movements in the coming months.