Danish Retail Sales Fail to Boost DKK Causing Pound to Danish Krone Exchange Rate Advance
Despite making an improvement over December’s results, Denmark’s latest retail sales results were unable to support the Danish Krone (DKK) and the Pound to Danish Krone (GBP/DKK) exchange rate continued to climb.
After opening this week at the interbank level of 8.42, GBP/DKK has largely trended higher thanks to Brexit and Bank of England (BoE) speculation. GBP/DKK briefly hit a weekly interbank high of 8.46 on Friday.
Friday’s Danish retail sales results had little influence on GBP/DKK movement, but were relatively optimistic.
The month-on-month retail sales results improved slightly from -0.3% to a smaller contraction of -0.2%, while the yearly figure rose from 1.1% to 1.6%.
The report noted that products like clothing were well down in January 2018, while food and other groceries were down slightly too. Other consumer goods were higher though.
Pound (GBP) Exchange Rates Supported by Brexit and Bank of England (BoE) Speculation
Rising market expectations that the Bank of England (BoE) could be preparing to tighten UK monetary policy again as soon as May 2018 have left the Pound appealing in recent sessions despite underwhelming UK ecostats.
The Bank of England (BoE) has shown confidence that UK data such as wage growth will improve in the coming months and that the bank may be pressured into hiking UK interest rates at a faster pace than previously expected.
As a result of the bank’s perceived hawkishness, BoE interest rate hike bets have risen, supporting the Pound.
On top of hawkish BoE speculation, the Pound was boosted on Friday by reports suggesting that Britain’s opposition Labour Party could vote to support an amendment put forward to Conservative rebels.
Backbenchers within the Conservative Party have proposed an amendment to the government’s trade bill, calling for Britain to remain in a customs union post-Brexit. Reports that Labour could back the amendment boosted ‘soft Brexit’ hopes and strengthened Sterling.
Danish Krone (DKK) Exchange Rates Weakened by Eurozone News
As the Danish Krone is pegged to the Euro (EUR), GBP/DKK movement has been more strongly influenced by Eurozone news and Euro appeal than any news from Denmark.
Eurozone data published over the past week included underwhelming confidence stats and PMI projections for February, which weighed on the Euro and by extension the Danish Krone.
On top of this, market anxiety over key Eurozone data and political developments next week have left the Euro looking unappealing.
The 4th of March will see the results of Italy’s 2018 general election come in, as well as developments on the possibility of a second ‘grand coalition’ in Germany.
Pound to Danish Krone Exchange Rate Forecast: Eurozone Data to Drive GBP/DKK
With a lack of influential UK data due for publication over the coming week, the Pound to Danish Krone (GBP/DKK) exchange rate is likely to be driven by Eurozone data for much of next week.
Slews of key Eurozone ecostats will be published throughout the week. Of particular note will be German inflation on Tuesday and Eurozone inflation on Wednesday.
If Eurozone inflation beats expectations, it could boost market speculation that the European Central Bank (ECB) may be pressured into tightening Eurozone monetary policy faster than previously expected.
Some UK data could still be influential next week, with consumer confidence from February set for publication on Wednesday and Markit’s February manufacturing PMI for Britain due on Thursday. Brexit and BoE news could inspire Sterling trade too.
Influential Danish data will be published next week too, including Denmark’s anticipated Q4 Gross Domestic Product (GDP) projections on Wednesday.
And of course, market speculation and reaction to Eurozone political news may also have an influence on the Pound to Danish Krone (GBP/DKK) exchange rate.