Over the past week, the Pound Sterling to Danish Krone (GBP/DKK) exchange rate moved from a high of 10.4126 to hit a low of 10.1063. The pairing has since advanced to 10.1793 but the GBP/DKK depreciation has been more a result of Sterling weakness than Krone strength.
A recent spate of poor British data has caused traders to delay bets as to the timing of a Bank of England (BoE) interest rate increase. The Krone, meanwhile, edged lower despite a complete absence of domestic data over the course of last week.
The dip in Krone sentiment has been linked to speculation that the Danish central bank’s Euro cap will ultimately fail, with bond yields falling faster than their Eurozone equivalents. Additionally, the high value of the Krone could see longer delays to bond auctions. All these developments have caused futures traders to delay forecasts for a Danish benchmark rate increase from the current -0.75%.
The Pound Sterling to Danish Krone (GBP/DKK) exchange rate softened by around -0.70% on Monday.
Monday has seen the Pound soften versus its Danish counterpart after the Confederation of British Industry (CBI) slashed UK growth forecasts. CBI stated that the prospect of a referendum on Britain’s membership within the European Union and the potential for a Greek exit from the Eurozone is weighing heavily on British growth prospects. Moody’s has also issued warnings about the ramifications of an EU exit on British growth prospects.
The Krone, meanwhile, advanced versus many of its closest peers after Industrial Production bettered estimates. On the year, Industrial Production rose by 4.44% in April, eclipsing the median market forecast -1%. On the month, April’s Industrial Production declined by -1.57%; avoiding the market consensus of a drop in output of -2.32%. However, fears surrounding the likelihood of the Euro cap failing have slowed the appreciation somewhat.
Looking ahead, there will be several influential domestic data publications over the coming week with the potential to provoke GBP/DKK movement. For those trading with the Pound, Industrial and Manufacturing Production data will be of most significance. This is because recent readings have been poor and prompted several analysts to forecast lacklustre second-quarter growth.
For those invested in the Danish Krone, Wednesday’s inflation data will be of most significance. With inflation currently at 0.5%, the Danish central bank will be hoping for a rise in the hopes of hiking the cash rate before the close of the year. Trade Balance and Current Account data will also have the potential to provoke Krone movement.
The Pound Sterling to Danish Krone (GBP/DKK) exchange rate is currently trending in the region of 10.1660.