Over the last five days the Pound Sterling to Danish Krone (GBP/DKK) exchange rate gradually advanced from a low of 10.4126 to achieve a high of 10.5633.
Although the UK’s first deflation reading since 1960 put the Pound under pressure on Tuesday, hawkish commentary from the Bank of England (BoE) and an unexpected surge in UK retail sales helped Sterling advance on a number of its rivals before the weekend.
Meanwhile, Denmark published domestic Consumer Confidence and Retail Sales figures last week. The measure of consumer sentiment was forecast to fall from 13.7 to 12.9 in May but it actually dropped to 13.0. The retail sales data for April was a little mixed, with March’s Month-on-Month and Year-on-Year numbers being positively revised to 0.4% and 2.6% respectively but April showing a MoM decline of -0.2%. The annual pace of sales growth fell to 0.5% last month.
Demand for the Danish Krone was also limited as a result of the ongoing Greek bailout negotiations. The prospect of the Hellenic nation’s exiting the Eurozone, and the subsequent threat of contagion, reduced the appeal of a number of the Euro’s neighbouring European currencies.
So far this week ecostats for both the UK and Denmark have been in short supply, with the UK only releasing the Confederation of British Industry’s (CBI) Reported Sales number. The CBI data was far-stronger-than-forecast and indicates that consumer spending continues to power the UK’s recovery.
Denmark’s Business Confidence gauge (due out on Thursday) is forecast to show improvement and advance from -11 in April to -10.04. Further GBP/DKK exchange rate volatility is also likely to be occasioned by the UK’s final first quarter growth figures, particularly as the pace of quarterly and annual expansion is predicted to have been positively revised. Upwardly adjusted growth data for the UK could bolster the Pound against peers like the Krone.
Denmark is set to publish its own first quarter growth numbers on Friday, with quarter-on-quarter expansion believed to have eased from 0.5% to 0.3% and annual growth predicted to slide from 1.5% to 0.9%. If these estimations prove accurate the Danish Krone could end the week on a softer footing against the Pound. Next week there are no Danish ecostats to be aware of so GBP/DKK exchange rate movement will probably be driven by the UK’s Markit Manufacturing/Construction/Services PMI and the Bank of England’s interest rate decision. Impressive UK data would support sooner-rather-than-later interest rate increases from the BoE and could help the Pound to Danish Krone exchange rate advance.