Danish data is in short supply this week, leaving any movement in the Pound Sterling to Danish Krone (GBP/DKK) exchange rate to be the result of macroeconomic developments such as UK inflation and employment figures. Tuesday saw the UK’s Consumer Price Index (CPI) rise from deflation at -0.1% into growth territory of 0.1% in May. The move was in line with forecasts and offered some reassurance that the dip below 0.0% in April was a temporary one. Additionally, the UK’s core inflation gauge advanced from 0.8% to 0.9% in May, a little softer than the 1.0% forecast. The increase is the first for seven months and was accredited to rising fuel and airline ticket prices.
Economist Samuel Tombs commented: ‘The big picture is that inflation is likely to remain extremely low throughout the rest of 2015. The UK’s weak inflation outlook is likely to ensure that the MPC keeps interest rates at their record low level for another year or so.’ Speculation on the Bank of England’s (BoE) path of interest rate hikes has had a major influence on the Pound exchange rate in the past year and investors are currently looking towards the BoE’s meeting minute release on Wednesday for guidance. After the past two meetings saw a couple of policymakers state that the decision on whether to hike interest rates or not was ‘finely balanced’, it appears as if we could be on course to see a divergence in votes in the near future.
It’s likely that the two policymakers in question are Martin Weale and Ian McCafferty, who have voted for an immediate increase in borrowing costs several times in the past 12 months. Meanwhile, the Danish Krone had an exciting week last week with a whole host of ecostats out for release. The annual Danish Industrial Production figure slipped from 4.92% to 4.44% in April, while the nation’s inflation rate managed to increase from 0.5% to 0.6% in May.
Looking beyond this week, the Danish Krone exchange rate is likely to fluctuate on account of Danish Retail Sales and Consumer Confidence data, due out on Monday 22nd June. The ecostats are likely to cause some moderate Pound Sterling to Danish Krone (GBP/DKK) exchange rate movement, but perhaps more so if the nation’s Retail Sales stat rises from 0.50% to 2.38% on the year in May as forecast. Following the Monday 22nd ecostats, there will be no other releases until Monday June 29th which will see Danish Business Confidence emerge, followed by the Danish Unemployment Rate and Gross Domestic Product (GDP) figures on June 30th.
The Pound Sterling to Danish Krone (GBP/DKK) exchange rate is trending in the region of 10.3260.