After a turbulent week of UK inflation and earnings data, the Pound could be in line for another volatile week.
In political news, the House of Lords is set to start debating the Article 50 bill, while UK domestic data is due to cover the speed of GDP growth.
Pound Battered by Rising Inflation and Slowing Wage Growth
The biggest influence on Sterling last week was domestic data, where Tuesday opened by showing January’s annual inflation rising to 1.8%. The Pound fell on the news, partly because it was lower than forecast and because the Bank of England (BoE) was not expected to hike rates on the relatively low level of inflation.
Further concerns were raised when wage growth fell to 2.6% in December, despite being forecast to remain unchanged.
Completing this trilogy of negativity were sub-par retail sales figures for January, which came in far below forecast on both the month and year.
Economists were quick to dampen the mood further by predicting that wages would continue falling, prices would rise and sales would remain limited.
The only notable Danish news last week was that the initial GDP growth figure had reprinted at 0.4% in Q4, as in Q3.
GBP/DKK Exchange Rate Forecast
In the coming week, Pound/Danish Krone exchange rate movement may occur as a result of the House of Lords debate on Article 50, which is expected to span a number of days, depending on whether peers disagree over certain points.
If peers decide to amend the bill and these amendments make it into the final draft, then the Pound could rise against the Krone due to raised hopes of a softer Brexit.
Key UK domestic data is expected over Tuesday and Wednesday; the former figures will cover Government borrowing in January. Wednesday’s news will show Q4 GDP growth rate second estimates, which are expected to show no change on the quarter or the year.
Danish data is due on Monday and Friday, respectively consisting of consumer confidence in February and retail sales over January.
As the Danish Krone is pegged to the Euro, it could drop if EUR declines in value on concerns about Greek debt crisis negotiations.