Pound Sterling Danish Krone Exchange Rate News: GBP/DKK Muted as NISER Warns No-Deal Brexit Could Cut UK Spending by £30bn

GBP/DKK Exchange Rate Flat as Brexit Angst Persists

The Pound Sterling to Danish Krone (GBP/DKK) exchange rate is stuck close to a three-week low this morning following a report that a no-deal Brexit could cost the UK government up to £30bn.

At the time of writing the GBP/DKK exchange rate appears range bound, with the pairing trading only slightly higher than the three-week high struck yesterday.

Pound Sterling (GBP) Undermined by NIESR Brexit Warning

The Pound (GBP) is treading water against the Danish Krone (DKK) as the UK currency continues to be pressured by Brexit jitters.

With talks between the UK and EU stuck at an impasse over the Irish border and the chances of a no-deal growing as each day passes, the news that such a scenario could dramatically cut government spending has further rattled investors.

According to the National Institute of Economic and Social Research (NIESR) the difference between a soft Brexit and the UK crashing out of the EU without a deal would be about £30bn over the next five years.

Presenting its report NIESR said:

‘Conditional on a soft Brexit, there is room in the government’s near-term debt and deficit targets to raise expenditure in areas where pressures are particularly high.

‘By contrast, a no-deal Brexit would eliminate any fiscal space and require the government to stabilise the economy in the short term.’

While the report adds to the growing number of negative Brexit headlines that have battered the Pound this week, its impact on Sterling has been largely limited, suggesting investors may be more focused on domestic politics for now.

Retail Sales Growth has limited impact on Danish Krone (DKK)

At the same time, with the Danish Krone (DKK) remains range bound against the Pound this morning despite an upswing in domestic retail sales.

Statistics Denmark reported that domestic sales growth climbed to 0.5% last month up from 0.3% in August.

However with the Krone being pegged to the Euro (EUR) the reaction in DKK has been non-existent as the single currency takes a breather after racing higher on Thursday following the European Central Bank’s latest policy meeting.

GBP/DKK Exchange Rate Forecast: Can the BoE Help to Lift Sterling Out of the Doldrums?

Looking ahead to next week’s session, Brexit may take a temporary backseat, with movement in the the Pound Danish Krone (GBP/DKK) exchange rate potentially being driven instead by the Bank of England’s (BoE) November rate decision.

This will be the bank’s first meeting since the August’s employment figures saw UK wage growth jump to a nine-year high, and while this is not expected to result in any policy changes from the BoE next week, it could still help to bolster Sterling if it leads to a more hawkish outlook from Governor Mark Carney.

In the meantime UK Chancellor, Philip Hammond will unveil his Autumn Budget on Monday, with a possible rise in public spending potentially supporting the Pound.

Luke Trevail

Luke studied Journalism at university but quickly moved into the financial sector, initially working in retail banking before joining TorFX in 2007. As a Senior Account Manager Luke assists in overseeing the management of the company’s exposure to currency volatility. He uses his years of foreign exchange experience to produce regular news updates exploring the latest currency movements.

Contact Luke Trevail