The British Pound to Danish Krone exchange rate fell from its Wednesday highs as investors sold the Pound off ahead of the day’s Bank of England (BoE) meeting. After the meeting, GBP/DKK’s losses were extended and the pair dropped to the level of 8.66.
Pound (GBP) Sold as Bank of England’s (BoE) Inflation Outlook Dipped
The Pound had previously surged on Wednesday as January’s UK manufacturing PMI from Markit met high expectations with a result of 55.9. The factory input price print also impressed with a record figure of 88.3, indicating the value of the Pound had caused prices of raw materials to surge.
Sterling spent most of Thursday’s European session falling, as investors took profit ahead of the Bank of England’s (BoE) first policy decision of 2017.
The bank confirmed that UK monetary policy would be left on hold as was widely expected and also stated that it expected Britain to grow faster than previously thought in 2017, projecting growth of 2%.
However, as the bank’s inflation outlook was not as high as predicted and the bank indicated a rate hike was just as likely as further easing, the Pound extended its losses.
Danish Krone (DKK) Benefits from US Dollar (USD) Weakness
Investors sold the US Dollar (USD) in favour of rivals like the Euro (EUR) on Wednesday night and for much of Thursday as the Federal Reserve left US monetary policy frozen as predicted.
As the Danish Krone is pegged to the Euro, it was able to benefit from this increase in demand for the shared currency and advanced against the Pound on Thursday morning.
GBP/DKK Forecast: Sterling Could Recover if Friday Ecostats Impress
While the Bank of England’s (BoE) meeting was generally disappointing to investors, demand for the Pound could improve on Friday depending on the results of Markit’s January UK services and composite PMI results.
The UK services sector is projected to have slowed slightly from 56.2 to 55.8 and the composite PMI is predicted to slip from 56.7 to 56. Any figure worse than these is likely to worsen concerns that UK growth could slow, despite the Bank of England’s (BoE) optimistic growth outlook this week.
Demand for the Danish Krone is likely to slip if investors return to the US Dollar before the weekend, but Friday’s Eurozone data could support the Krone if it impresses.
Friday will see the publication of December Eurozone retail sales as well as Markit’s January services and composite PMI for Eurozone nations and the bloc as a whole.
If these figures impress, the Pound to Danish Krone exchange rate is likely to end the week below its opening levels.