The Pound to Danish Krone exchange rate has fallen to its worst levels since mid-January this week and as of Thursday morning had hit a 7-week-low of 8.55.
The pair has fallen since opening at the level of 8.60 this week due to increasing concerns about the imminent Brexit process as well as slowing UK retail activity.
Pound (GBP) Fails to Find Support This Week
The Pound has slumped for most of the week so far and as of Thursday still lacks any notable support.
Wednesday’s European session saw UK Chancellor Philip Hammond hold his first (and last) Spring Budget. Following this week’s Budget, the Budget proper will be held in the autumn instead.
However, despite the finality the event was largely brushed over by investors due to a lack of fresh details of plans for the UK economy during the Brexit process. News that the government would spend £2b on social care and also spend more on a new grammar school program was of little interest to most GBP traders.
Even an upgrade to Britain’s 2017 growth outlook from the independent Office for Budget Responsibility (OBR) was unable to support the Pound amid persistent concerns that the Brexit process and worsening UK retail activity would slow UK growth anyway.
Danish Krone (DKK) Sees Modest Gains on Local and Eurozone Data
The Danish Krone has struggled to capitalise on the Pound’s weakness however. As the Krone is pegged to the Euro, a lack of consistently strong Eurozone data has left demand for the shared currency and the Krone mixed.
Tuesday saw the publication of Denmark’s January industrial production results. While the year-on-year print was decent, slipping from 8.8% to 2.5%, the monthly result worsened from 2% to a contraction of -4.8%.
The previous yearly figure was also revised lower.
Over in the Eurozone, investors have been awaiting the European Central Bank’s (ECB) latest meeting. Germany’s solid industrial production figures from Wednesday slightly supported the Euro and also helped the Krone to sturdy.
GBP/DKK Forecast: UK Trade Data Could Support Pound on Friday
Friday could finally put an end to this week’s limp Pound trade, but only if the January UK trade deficit print is able to beat expectations.
During the Spring Budget, Chancellor Hammond indicated the government would indeed be working on bringing down the UK deficit once again. If the deficit lightens more than predicted, Pound trade could improve.
Sterling may also be influenced by the day’s January construction, industrial production and manufacturing production figures.
The Danish Krone, on the other hand, is likely to spend much of Friday reacting to Thursday’s European Central Bank (ECB) news if it drives the Euro. Friday’s German trade balance figures from January may also influence EUR and DKK movement.
Friday will also see the publication of Denmark’s February year-on-year inflation figures, which are expected to remain at 0.9%. This is unlikely to influence GBP/DKK movement.