The current week has seen the Pound Sterling to Danish Krone (GBP/DKK) exchange rate decline overall to 10.1675, although Sterling began on a positive note with a high of 10.3610 being recorded on Tuesday. Given the shortage of domestic economic releases, GBP/DKK movement has been mainly caused by statements and political developments in the UK.
Notable developments for the Pound began on Monday this week with the statement from Bank of England (BoE) Deputy Governor Sir Jon Cunliffe that ‘If you look around, the UK and the US seem to be the only places that are growing strongly. If you put that economic picture together it seems the next move on monetary policy would be up’. Cunliffe’s statement triggered a Sterling uptrend, although this was soon brought back down to earth by the UK Public Sector New Borrowing figures which showed that UK debt had risen.
In a direct contrast to Cunliffe’s commentary, today saw BoE Deputy Governor Ben Broadbent speak out against a rate hike in the near-future, instead bluntly saying: ‘I was not one of those on the brink of voting for higher interest rates’.
Denmark had a thoroughly disappointing set of economic publications this week but this failed to grant the Pound a decisive edge against the Krone. The Danish Consumer Confidence Score for September fell from 9.2 points to 5; in addition, monthly Retail Sales for August dropped from 0.8% to -0.1%. The yearly result came in with a sharp drop from 3.7% to 0.2%.
One of the biggest blows to the Danish economy was dealt when the news came that Denmark was facing a worrying shortage of graduates in engineering and science-related fields. Jan Rose Skaksen of the Rockwool Foundation characterised the problem by saying: ‘The price, for example, of engineers will just keep going up until jobs are filled’. That will hurt competitiveness and curb growth and not as many people will be hired.’
Next week, Pound Sterling/Danish Krone exchange rate movement may occur as a result of the Danish Business Confidence score for September, the Danish Finalised Q2 GDP and the UK Manufacturing and Construction PMIs for September.
Coming in on Tuesday, the Danish Confidence score is expected to improve very marginally from -7 points to -6, while with the quarterly and yearly GDP results, revisions are expected to come in at 0.2% and 2% respectively.
For the UK, no direct predictions have been made for either PMI result. However, according to Markit Senior Economist Rob Dobson, (speaking on this August’s Manufacturing PMI release): ‘The UK manufacturing sector remains in a holding pattern, with production growth hovering around the stagnation mark. Export order volumes continue to disappoint, with the Sterling exchange rate, weak sales growth to the Eurozone and the slowdown in China all having an impact. It is too early to say what the indirect impact may be if there is any knock-on effect for broader global economic growth.’