Last week the Pound Sterling to Danish Krone (GBP/DKK) exchange rate fluctuated between highs of 11.3739 and lows of 7.6229 as the Pound was first supported by an encouraging UK Services PMI and then undermined by general election concerns.
The Krone also experienced movement towards the close of last week as Denmark’s trade surplus widened by more-than-forecast. Other figures showed that domestic industrial production increased by 1.08% on the month in February– bettering the 0.25% gain predicted – and the annual rate of inflation advanced from 0.2% to 0.6%.
The Danish data wasn’t universally positive however, as industrial production figures for January were negatively revised, resulting in a markedly lower-than-anticipated annual result.
Danish data is in short supply this week, leaving movement in the DKK/GBP exchange rate largely up to UK data and global economic developments. The currency pair consequently advanced to a high of 0.0967 on Tuesday after the UK published disappointing core inflation data.
While the non-core CPI measure held at 0.0% as expected, core inflation unexpectedly drifted from 1.2% to 1.0% – causing widespread Sterling softening.
However, although the Krone is performing comparatively well against the Pound, the Danish currency is trending close to multi-year lows against two of its other major peers – the Euro and US Dollar.
Although the untried nature of the European Central Bank’s (ECB) quantitative easing programme and persistent uncertainties regarding the Greek bailout situation have driven the Euro lower against a number of peers, the Krone has been struggling against its European counterpart of late. Economists are now betting that the Danish central bank will have to take steps in order to defend the Krone’s peg with the Euro and increase borrowing costs just months after lowering them.
That being said, an analyst with Danske did recently note; ‘In our base case, we do not expect a rate hike in the coming 12 months. There are still a number of factors which could push the Krone higher’ – like disappointing US ecostats.
This point was proved during the European session as the US Advance Retail Sales stats fell short of forecasts, dampening Federal Reserve Rate hike bets and causing the US Dollar to Danish Krone (USD/DKK) exchange rate to weaken to 7.0524.
The Danish Krone was achieving 7.4705 against the Euro on Tuesday.
Next week the Danish reports to be aware of include the nation’s Consumer Confidence and Retail Sales numbers. Positive domestic data could help the Krone recover ground.