This week has been a pretty poor one for the Pound, with the currency falling against the Danish Krone and a number of its other rivals. For the most part, this large-scale depreciation has been triggered by political defragmentation over the recently announced UK Budget.
Last week, GBP/DKK dropped from 9.5851 to 9.4328.
Sterling Slide Triggered by 2016 Budget Repercussions
The Pound started this week with a staggered start in light of the turmoil triggered by last week’s 2016 Budget Announcement. The most objectionable proposal was for a cut in disability benefits in order to meet the surplus target by 2020; this faced so much opposition from all sides that then Secretary of State for Work and Pensions Iain Duncan Smith resigned from his post on Friday; this was promptly filled by Stephen Crabb.
Yesterday’s political focus was directed squarely at the Budget; such was the controversy of the planned disability benefit cut that it was soon announced that the measure had been dropped – at the cost of leaving a £4bn hole in the Budget to be filled.
Elsewhere, the UK Referendum debate failed to fade away, with the Confederation of British Industry (CBI) putting forward an estimate that almost a million jobs and approximately £100bn would be lost if the UK voted to leave the EU.
Failure to Vanquish Budget Phantoms Leaves Sterling Reeling
The primary focus of most UK media today has been the appearance of Chancellor George Osborne in the House of Commons, with the official defending the Budget and trying to clarify the situation.
Unfortunately for the Pound’s prospects, clarity has not resulted from today’s political circus. The Chancellor’s appearance was met with applause by his supporters and jeers by his opponents, but very little concrete information came out of the Commons today. Although it appears as though no cuts will take place for the disabled, not even this was assured after the dust settled between the Chancellor and his Shadow counterpart, John McDonnell.
Danish Krone Triumphs Against Sterling Today on Rising Retail Sales
The current week has been fairly quiet for the Danish Krone; yesterday brought the March consumer confidence score, which slipped from 4 points to 3.6, a better outcome than had been forecast.
Today, the nation’s retail sales stats have been announced; with consumer spending falling from 0.3% to -0.7% on the month but rising from 0.1% to 1.9% on the year. The Danish Krone remained trending higher against the Pound after the data was published.
GBP/DKK Exchange Rate Forecast
For the rest of the current week, Pound Sterling/Danish Krone exchange rate movement may occur as a result of tonight’s planned speech from Bank of England (BoE) official Sarah Breeden, as well as Thursday morning’s selection of UK economic data.
This will cover the BBA mortgage approvals and retail sales stats for February, as well as the CBI distributive trades outcome for March.
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