The past seven days of trading have been volatile for the GBP/DKK exchange rate, which hit an eleven-month low of 9.8875 after declining from a high of 10.1966 this week.
Pound Sterling spent the first few trading days of 2015 steadily declining against the Danish Krone, after a short-lived uptrend caused by a sizeable drop in Danish Manufacturing PMI, which fell from 61.5 to 56.6 despite forecasts of a rise to 63.84.
A better-than-expected performance from the UK construction sector helped to keep the GBP/DKK exchange rate trending within a narrow range on the 5
th
, with the Markit PMI increasing from 55.3 to 57.8. News on the 6
th
that business confidence remained low in Denmark, with a score of -7, helped keep the exchange rate relatively stable, although a drop in both the UK Services and Composite PMIs saw the Pound on the decline again. With the poor performance of the manufacturing sector, it was important that the UK services sector produced strong results, but instead the PMI fell slightly further than anticipated down to 55.5. The Composite index also fell to 55.3 from 55.8.
The Krone made strong advances on the 7
th
following the news that unemployment remained steady at a seasonally-adjusted 4.5% as predicted, less than half the average for the European Union. The number of people out of work fell slightly from 120,100 to 119,000 in November, while youth unemployment held steady at 2.9%.
Poor UK trade figures disappointed investors on Friday as the trade deficit remained wider than expected. Imports did fall more than exports, although many attribute this to a continued slump in oil prices making it particularly cost-effective for UK importers. GBP got a reprieve on Monday after Denmark’s industrial production figures failed to rise as far out of negative territory as expected. Month-on-month (MoM) Industrial Production rose from -2.62% to -0.57%, remaining negative and below the predicted 0.22%. Year-on-year production rose from -2.32% to 0.18%, a positive result but far shy of the forecast rate of 2.13%.
It has been a bad day for the UK economy today, with lacklustre sales figures, an unexpected drop in Industrial Production and an accelerating contraction in Manufacturing Production all suggesting a poor overall performance from the economy during the last quarter of 2015.
There is no data due from Denmark for some time, while Thursday sees the Bank of England (BoE) make their next decision on interest rates. Investors are expecting the Monetary Policy Committee (MPC) to remain dovish and vote to hold interest rates level at 0.50%. The meeting minutes, released at the same time as the rate decision, will show whether the attitude of policymakers is becoming more or less optimistic.
The GBP/DKK exchange rate is currently trading between 9.9010 and 10.0110.