BUZZ-COMMENT-Growth surprise could de-rail EUR's rally versus the SEK

Feb 28 (Reuters) - A surprisingly strong upward revision to Sweden's fourth quarter growth numbers could unsettle the recent recovery and potential bull reversal in EUR/SEK.

Technically, the outlook had improved for the euro as a series of trend reversal signals warned that a near month-long EUR/SEK bear run might be ending.

Friday's updated economic growth data showed a 0.8% expansion quarter-on-quarter and a 2.4% return year-on-year for the last three-months of 2024. These numbers compare with January's flash returns of 0.2% and 1.2%.

Growth numbers were also revised higher for the previous quarters, leaving a 1.0% GDP pace for 2024.

The data beat market expectations and exceeded the Riksbank's forecast of 0.4% Q/Q and 1.2% Y/Y. The central bank's estimate for 2024 was 0.6%.

A Swedish economic recovery is underway, but the outlook is uncertain and the Riksbank could deliver one more rate cut. A further rate cut runs counter to our view and with a surprisingly high inflation rate, we still expect Swedish rates to be held at 2.25% this year.

Interest rate differentials should underpin the SEK with the European Central Bank inflation expectations pointing to rate cuts and a key rate eventually dropping below the Riksbank's 2.25% benchmark.

EUR/SEK has backed away from an 11.2040 recovery high, but it now remains to be seen if the damage to the trend reversal is severe enough to negate the technical wind change.

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