The past week has seen the Pound Sterling to Danish Krone (GBP/DKK) exchange rate fall from a high of 10.5633 to a low of 10.2269.
While the Krone has been supported by positive Danish data and hopes that the Greek situation can be resolved without a ‘Grexit’ taking place, the Pound has been pressured lower by ‘Brexit’ fears, lacklustre UK reports and bets that the Bank of England (BoE) will refrain from adjusting borrowing costs for the foreseeable future.
Last week Danish Business Confidence improved from -11 to -6, surprising forecasts for a reading of -10. This positive report was followed by Denmark’s preliminary first quarter growth numbers. The nation’s economy was shown to have expanded by 0.4% in the first quarter on a quarter-on-quarter basis – less than the growth of 0.5% recorded in the final three months of 2014 but beating the 0.3% projection. Similarly, the nation posted annual growth of 1.7% – smashing the 0.9% forecast and improving on the previous quarter’s year-on-year figure of 1.5%.
Analyst Tore Stramer said of the growth data; ‘The first months of 2015 have certainly offered a range of positive key figures. Employment grows, consumer confidence is getting close to a record high, export and industrial production took a decent leap in March, price gains in the real estate market are spreading throughout the country and debit card revenues have increased. A lot indicates that the upturn has been taking root in the Danish economy and has even accelerated a bit at the start of the year.’
Denmark’s unemployment report was also published on Friday, with the jobless rate holding at 4.8% in April, as expected. The GBP/DKK exchange rate weakened to 10.3614 before the close of the session but has since fallen to 10.2358 in response to disappointing UK Manufacturing and Services PMIs. With the reports indicating that the UK’s economy is struggling to get back on track after the first quarter slowdown, the odds of the Bank of England (BoE) looking to hike borrowing costs before the close of the year are slim and the Pound is likely to remain trending in a weaker position against a number of its peers as a result.
Although Danish data is lacking before the weekend, domestic ecostats could have an impact on the European currency next week.
Monday sees the release of Denmark’s Industrial Production numbers for April. The pace of production is forecast to have fallen by -9.5% on the month, following growth of 5.3% in March, with output down -1% on the year. On Tuesday the nation will be publishing its Current Account report. Economists are anticipating a slight narrowing in the surplus from 2.9 billion Krone to 2.6 billion Krone. Trade balance and inflation data is scheduled for release on Wednesday, with the pace of consumer price gains believed to have held at 0.5% on the year.