Pound to Danish Krone (GBP/DKK) Exchange Rate Fails to Recover Weekly Losses as Brexit Fear Persists
After a rebound in demand for the Pound (GBP) yesterday, the Pound Sterling to Danish Krone (GBP/DKK) exchange rate slipped again this morning. Investors were hesitant to keep buying the Pound amid Brexit uncertainty, even though German data weakened the Danish Krone (DKK).
As the Danish Krone is pegged to the Euro (EUR), GBP/DKK sees the same shifts in movement as GBP/EUR.
After plummeting from the interbank level of 8.65kr to 8.53kr last week, GBP/DKK has slipped further this week so far. A brief recovery attempt yesterday was not enough to help the pair to recover to the week’s opening levels.
The Pound has been unable to hold its ground this week despite weakness in the Euro (and by extension the Danish Krone), due to concerns about how the Brexit process will unfold and a hat trick of disappointing UK PMIs.
Pound (GBP) Exchange Rate Recovery Limited on Poor UK Data and Brexit Jitters
Investors sold the Pound (GBP) at the beginning of the week in response to Britain’s January construction PMI from Markit, and the Pound selloff deepened on Tuesday when the services sector PMI printed just barely above stagnation.
With Britain’s biggest sector for economic activity hovering above stagnation, investors are concerned that Britain’s economy could start off the year nearly stagnant too.
The weakness in the latest PMI results came from a number of uncertainties limiting business activity. While these included concerns regarding slowing global growth and trade jitters, the biggest concern by far was Brexit uncertainty.
The formal Brexit date is still set to take place on the 29th of March, now under two months away. There is still no sign of how the Brexit process will unfold and the UK government has indicated it will not delay the leaving date either.
With the reality of Brexit uncertainties hitting businesses hard and the short-term increasingly cloudy, investors haven’t had much reason to buy Sterling this week despite weakness in rivals.
Danish Krone (DKK) Exchange Rates Struggle amid German Recession Fears
The Euro (EUR) has had a bearish week this week, and as a result so has the Euro-pegged Danish Krone (DKK).
Concerns about the slowing Eurozone growth outlook and news of a recession in Italy were already weighing heavily on the Danish Krone at the beginning of the week, but since then German data has repeatedly fallen short and worsened concerns about Germany’s economy as well.
Germany is the Eurozone’s biggest economy and one of the biggest in the world, so with German ecostats coming in well below forecasts and factory growth seeing a surprisingly deep contraction, fears of a German recession are weighing heavily on the Euro and Danish Krone.
This week’s German data has made analysts increasingly concerned that Germany is headed towards recession and this has made it easier for the Pound to Danish Krone (GBP/DKK) exchange rate to avoid major losses.
Today, the Danish Krone’s strength versus a weak Pound (GBP) was further limited as the EU announced it had cut growth forecasts even lower.
2019 Eurozone growth is expected to reach just 1.3% this year, well below the previous forecast of 1.9%. This is partially due to expectations of slow growth in Germany and Italy.
Pound to Danish Krone (GBP/DKK) Exchange Rate Investors Await Further German Stats
Most of this week’s Pound to Danish Krone (GBP/DKK) exchange rate movement so far has been influenced by Brexit fears weighing on the Pound (GBP) and German recession fears weighing on the Euro (EUR) and Danish Krone (DKK).
As a result, further developments in these areas are likely to remain the focus for investors.
While no notable Brexit developments are expected ahead of a UK Parliament debate on Brexit in the middle of the month, Friday’s German trade balance report from December could prove influential if it surprises investors.
Amid concerns about how global trade tensions are impacting the Eurozone economy, if the German trade report is better than expected it could lighten jitters a little and offer the Danish Krone some relief.
Friday will also see the publication of Denmark’s December trade balance figures, but they are unlikely to be particularly influential compared to Eurozone news.
Any surprising late-week developments in the Brexit process could also influence the Pound to Danish Krone (GBP/DKK) exchange rate before the end of the week, as Pound investors await next week’s Brexit news and UK growth stats.