Greater-than-expected UK Inflation Rate Slowdown Keeps GBP/DKK Exchange Rate Positive
The Pound has made steady gains against the Danish Krone today, following a bigger-than-expected slowdown in UK inflation rates in February.
Both ‘base’ and ‘core’ inflation rates have fallen, indicating reduced intensity in the growth of prices across the country.
The base reading fell from 3% to 2.7%, while the core figure (which removes volatile factors like fuel and food costs) also slowed from 2.7% to 2.4%.
Recent Pound to Danish Krone Gains Lower than Previous Brexit-Boosted GBP/DKK Exchange Rate
The Pound’s favourable movement against the Danish Krone today was an extension of yesterday’s GBP/DKK rally.
Sterling made major gains against most currency peers when it was announced that a provisional Brexit transitional deal had been agreed between UK and EU negotiators.
The arrangement was thought to end current concerns about the status of EU nationals in the UK during Brexit, while providing plenty of time for UK businesses to prepare for life outside the EU.
Not everyone was optimistic, however, with critics saying it was a capitulation by the UK government.
While the UK will be allowed to make trade deals with other nations as it leaves the EU, in a range of other matters the UK has to abide by EU laws without any say in the matter.
Danish Krone to Pound Exchange Rate (DKK/GBP) Slides despite Consumer Confidence
Static levels of Danish consumer confidence in March have kept the Krone to Pound exchange rate unfavourable today, with DKK/GBP losses coming from Sterling’s strength.
The March confidence score stayed at 8.5 points, which is technically a positive result. Forecasts had been for a decline to the 8-point range.
Economic optimism among Danes has remained relatively flat since the start of 2018, with January’s 8.2 point reading being upgraded slightly to the present 8.5 point level.
Pound to Danish Krone Exchange Rate Forecast: GBP/DKK Gains could be Extended on Higher UK Average Earnings
The Pound’s strong performance against the Danish Krone (GBP/DKK) this week could continue into tomorrow, when UK earnings and unemployment rate data will be released.
Current expectations are for the pace of wage growth to have risen in January, from 2.5% to 2.6%.
Although this will leave base inflation rates above the pace of wage growth, forecast-matching results will still mean that the gap between earnings and price growth has shrunk.
A smaller gap between the two readings means better conditions for UK households, as the cost of goods will no longer be outstripping regular incomes.
An added bonus would be a decline in the UK unemployment rate for January, although current estimates are for a static reading indicating no change.
The next Danish economic data will be further ahead, coming out on Friday.
Danish retail sales stats for February are out on that day and estimates are for higher month-on-month and year-on-year sales readings.
The Krone could appreciate on forecast-matching results, especially as January’s monthly reading showed a -0.2% decline in sales.