Pound to Danish Krone (GBP/DKK) Exchange Rate Rises as Pound Benefits from Brexit News
The Pound Sterling to Danish Krone (GBP/DKK) exchange rate advanced today, as the UK and EU agreed to a political declaration surrounding their new Brexit agreement.
GBP/DKK briefly slipped earlier in the week, but not significantly. On Thursday morning at the time of writing, GBP/DKK had recovered from its November lows and was trending near its best levels since last week.
Lasting concerns that UK Prime Minister Theresa May’s Brexit plan will not find enough domestic support to pass through Parliament have limited Pound (GBP) demand, however.
Meanwhile, the Danish Krone (DKK) has been slightly stronger due to Euro (EUR) strength. Investors are hopeful that Italy will reach some kind of agreement with the EU regarding its controversial budget plans, rather than tensions between the nations worsening.
Pound (GBP) Exchange Rate Recovery Limited as UK Political Jitters Persist
Demand for the Pound (GBP) jumped on Thursday, in reaction to news that the UK and EU had made a political declaration over the Brexit agreement that will cover the future trading relationship between them.
Pound investors remain concerned about the lack of domestic support for the Pound, however.
Theresa May seems to have avoided a leadership contest from within the Conservative Party for now, but the sizeable opposition she faces from inside her own party as well as opposition parties there are concerns about how much support her plan really has.
May’s minority government has divisions within it and Northern Ireland’s Democratic Unionist Party (DUP) that props her up has expressed a strong dislike for the Brexit bill.
As a result, there is fear that the bill could collapse and lead to a ‘no-deal’ situation, thus limiting Sterling’s potential for gains.
Danish Krone (DKK) Benefits from Firming Euro (EUR)
Demand for the Eurozone’s shared currency, the Euro (EUR), has firmed since Wednesday despite news that the EU had rejected Italy’s budget plans for the second time. As the Danish Krone (DKK) is pegged to the Euro this also bolstered the Krone.
Italy had stood firm on its controversial plans, which focused on government borrowing and spending, but was criticised by the EU for failing to meet guidelines.
The EU has indicated it will consider potential disciplinary action against Italy, but both Italy and the EU have expressed a desire to avoid this if possible.
Analysts generally expect that Italy and the EU will be able to reach some kind of reconciliation, rather than the tensions between them worsening further.
This has limited the Danish Krone’s losses versus a climbing Pound (GBP), but Sterling’s gains were still notable.
Pound to Danish Krone (GBP/DKK) Exchange Rate Investors Anticipate Eurozone Growth Stats
Brexit developments are likely to remain the most influential potential developments for Pound (GBP) exchange rates, particularly any potential developments regarding domestic support for the UK-EU bill.
Failing that, the Pound to Danish Krone (GBP/DKK) exchange rate could be influenced more by Friday’s anticipated Eurozone ecostats.
This will see the publication of Germany’s final Q3 Gross Domestic Product (GDP), as well as Markit’s November PMI projections for the Eurozone bloc.
The most influential PMI figures are typically German manufacturing stats, as well as the bloc’s overall manufacturing and services figures. These will give investors a better idea of how the Eurozone economy is faring this month.
Of course, any political developments regarding Italy or support for UK Prime Minister Theresa May’s Brexit plan in the UK could also drive the Pound or Danish Krone (DKK).
Looking ahead, next week sees the publication of Denmark’s October retail sales which could cause some limited Pound to Danish Krone (GBP/DKK) exchange rate movement on Monday if it surprises investors.