The Swedish krona is seen losing further ground in the next months following the ‘Brexit’ vote, suggested analysts at Danske Bank.Key Quotes“The knee-jerk reaction in EUR/SEK has been more or less as expected given the unexpected outcome in the referendum. Hence, the krona is currently the Riksbank’s best friend with KIX trading close to 3% higher than its Q3 forecast”.“Our base case is, and has been, that the krona will be weaker with Brexit due to risk aversion and general uncertainty as well as due to repricing of the Riksbank and the ramifications on growth”.“On the back of extended/prolonged QE by ECB the likelihood of a prolongation by RB after end 2016 has increased. This is, however, not likely to be announced until October, while we expect the Riksbank to lower its repo rate path at the July meeting, pushing the first rate hike into 2018”.“Under these circumstances, risk sensitive and pro-cyclical currencies like the krona tend to underperform. Therefore, we see EUR/SEK trading in the 9.30-9.50 range for the next few months amid continued political uncertainty”.“That said, the relative economic outlook suggests that the krona will rebound over time vs. the dollar and the euro while fundamental models indicate the krona is substantially undervalued. In all, we raise our forecast profile for EUR/SEK to 9.40 (9.30) in 1M, 9.30 (9.20) in 3M, 9.20 (9.10) in 6M and 9.10 (9.00) in 12M”.