Low Pound to Danish Krone Exchange Rate Appeal Keeps Pair Low despite Poor Danish Data
Thursday’s Danish industrial production figures disappointed investors but have had little impact on the Pound to Danish Krone (GBP/DKK) exchange rate.
Denmark’s November industrial production report printed at 2.1% month-on-month and a concerning -1.1% year-on-year.
What was even more concerning was the downside revisions to previous figures. The previous monthly figure was revised from 2.7% to 2.1% while the yearly figure was downgraded from 0.2% all the way to -1.5%.
Overall though, the monthly gains were seen as positive.
As the Danish Krone (DKK) is still pegged to the Euro, the report had little influence on Krone movement and GBP/DKK has been largely influenced by the Pound (GBP) as well as Eurozone news.
Pound (GBP) Exchange Rates Slip on UK Economic Concerns
The past week’s UK data gave little confidence to Pound investors and left the outlook for both Britain’s economy and the currency filled with uncertainties.
Wednesday’s data was mixed. While manufacturing and industrial production prints both beat expectations, and the NIESR predicted that Britain’s economy grew more than expected in Q4 2017, many concerns remain about the economic outlook.
Analysts have warned that uncertainty surrounding Brexit could impact factory activity as businesses hesitate to place new orders.
Pound investors were also concerned about a report, commissioned by Mayor of London Sadiq Khan, detailing the potential effects of a ‘hard-Brexit’ scenario.
According to the report, Britain could lose around half a million jobs in a ‘no deal’ Brexit scenario, Khan said on Thursday.
‘If the government continue to mishandle the negotiations we could be heading for a lost decade of lower growth and lower employment,
The analysis concludes that the harder the Brexit we end up with, the bigger the potential impact on jobs, growth and living standards.’
Danish Krone (DKK) Exchange Rates Propped Up by Euro (EUR) Strength
The lasting appeal of the Euro (EUR) has kept the Pound to Danish Krone (GBP/DKK) exchange rate closer to the week’s opening levels, as the Krone is pegged to the shared currency.
Recent Eurozone ecostats, including positive German growth figures and the bloc’s improving employment rate, have made investors confident that the Eurozone economy is in for a strong performance in 2018.
This, as well as hopes for a ‘grand coalition’ to run Germany’s next government, have helped the Euro to hold its ground which has in turn kept pressure on GBP/DKK.
Pound to Danish Krone (GBP/DKK) Forecast: UK Inflation Report in Focus
The Pound to Danish Krone (GBP/DKK) exchange rate is unlikely to see much more movement before the weekend. As a result, the pair is likely to close the week relatively close to its opening levels, with the interbank GBP/DKK exchange rate forecast to remain around 8.40.
Looking ahead to next week, the GBP/DKK exchange rate is likely to be driven by key UK data due for publication.
Britain’s December Consumer Price Index (CPI) will come in on Tuesday and is forecast to show that price rises have slowed from 0.3% to 0.2% month-on-month, and from 3.1% to 3% year-on-year.
If the UK inflation report comes in higher than expected, it is likely to boost speculation that the Bank of England (BoE) could be pressured into hiking UK interest rates again sometime this year.
On the other hand, lower than expected inflation figures could lead to further Pound weakness as it would indicate UK inflation can be ascribed to lower Pound exchange rates rather than domestic price pressures.
Later on in the week, Britain’s December retail sales report could also influence the Pound.
Danish Krone trade is likely to continue to be driven by Eurozone until more Danish data is released later in the month.
In terms of Eurozone data, GBP/DKK traders will be anticipating German and Eurozone inflation stats due on Tuesday and Wednesday respectively.