By Neal Kimberley

LONDON, Feb 15 (Reuters) - Buying sterling against the Swedish crown might seem foolhardy given the contrasting statements of the central banks concerned, but the cross is near 20-year lows and the market may be oversold.

Those who are short of the pair might be minded, at the least, to book some profit and buy back some of their sterling.

The 9.7418 level in sterling/Swedish crown hit on Thursday was the lowest seen since 1992.

On the surface, the argument for sterling to weaken even further against the Swedish crown is easy to make.

Bank of England Governor Mervyn King still sees the need for a rebalancing of the British economy.

The U.K. needs 'to find ways of boosting overseas demand for our products in order to bring about the rebalancing that the UK economy needs to see,' he said on Wednesday.

A weaker pound would help make British exports more competitive on the international stage.

Given that the BoE is also set to 'look through' a temporary period of above-target inflation, the risk that policymakers might be concerned that a weaker pound could boost imported inflation does not look acute.

But is any of this new?

And if is not new, how does it justify selling sterling against the Swedish crown at 20-year lows?

King has been talking about a rebalancing of the British economy for a few years, and, as can be vividly seen by the slide in the sterling/Swedish crown exchange rate, the pound has weakened quite substantially.

On the other side of the equation, Sweden's central bank seems relatively relaxed about the rise of the crown.

The strength of the Swedish currency is not a problem, Central Bank Governor Stefan Ingves said on Wednesday after the Riksbank left interest rates unchanged.

'The crown level is currently well in line with our forecasts,' First Deputy Governor Kerstin af Jochnick said on Thursday.

Yet Swedish exporters sell heavily into a euro zone whose collective economic output shrank again in the fourth quarter of 2012, registering a its first full calendar year with no single quarter showing growth.

Faltering euro zone economic growth does not bode well for Sweden's exporters whose competitive position will be hamstrung by a strong crown.

Based on central bank comments alone, selling the pound against the crown seems eminently logical, even if the pair is trading a multi-decade lows, and many will have done precisely that.

But if the market already owns that trade, is it just a little too obvious to expect it to go much further?

(Editing by Nigel Stephenson) Keywords: MARKETS FOREX/GBPSEK

COPYRIGHT

Copyright Thomson Reuters 2013. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.