The Pound to Danish Krone exchange rate surged on Tuesday as UK data boosted the Pound while the Krone was weakened by long-term Eurozone concerns due to the Krone being pegged to the Euro. This is despite this week’s Eurozone and Danish ecostats being largely optimistic. GBP/DKK trended above 8.77 at the time of writing.
Pound (GBP) Bolstered by British Manufacturing Figures
Demand for the Pound was limited in the final weeks of 2016 as investors grew increasingly jittery about the imminence of the Brexit process amid concerns that UK economic activity was beginning to slow.
However, when UK markets opened on Tuesday for the first trade week of 2017, investors were largely impressed by the day’s December Manufacturing PMI from Markit.
The figure was expected to fall from 53.4 to 53 but instead improved to 56.1. November’s figure was also revised higher, to 53.6.
Despite some analysts suggesting that official figures may not be this strong, the report bolstered hopes that Britain’s economy would continue to see solid performance as the Brexit process proper begins.
Danish Krone (DKK) Pulled Down by Euro (EUR) Weakness
Denmark’s December Manufacturing PMI results come in well above expectations on Monday, beating forecasts of 56.55 to come in at 64.3. November’s figure was also revised higher from 56.6 to 57.1.
Despite this, the Krone’s value was dragged down by a fresh run of Euro bearishness.
The shared currency was sold due to increasing strength in the US Dollar on Tuesday, which it shares a negative correlation with. This prevented the Euro and Krone from benefitting from Germany’s impressive December unemployment results.
Euro demand continues to be undermined by long-term downside factors, such as concerns that protectionist politics will become more popular in the bloc throughout 2017.
GBP/DKK Forecast: Will UK Data Continue Impressing?
The continued strength of the Pound this week will largely depend on the strength of Britain’s other PMI results from Markit. If construction and service PMI figures beat expectations like manufacturing did, Sterling is likely to sustain much of its gains this week.
However, if they fail to impress, hopes of Britain’s economy performing well despite the Brexit process will fade and the Pound may well shed some of its Tuesday gains.
Britain’s construction figures will be published on Wednesday, followed by services and composite results on Thursday. Other UK data due includes November consumer credit and mortgage applications.
Danish data due for publication in the next few days includes December business confidence on Wednesday and the nation’s unemployment rate on Thursday.
However, the Krone is more likely to be directly influenced by the Eurozone’s final December PMI results, December inflation predictions and November Eurozone retail sales which all publish this week.