Pound to Danish Krone (GBP/DKK) Exchange Rate Slides despite Lack of Support for Krone
Investors are hesitant to buy the Pound Sterling to Danish Krone (GBP/DKK) exchange rate this morning, as Brexit uncertainty takes a stronger hold on Pound (GBP) movement ahead of Friday’s current formal Brexit date.
GBP/DKK didn’t move much last week due to mixed demand for both currencies, and the pair opened this week near the interbank level of 8.67kr.
GBP/DKK has slipped slightly since then, but demand for the Danish Krone (DKK) is too limited to capitalise on Pound weakness.
The Danish Krone is pegged to the Euro (EUR), so it moves in sync with Euro movements.
As a result, it is influenced by the same news as the Euro – and this week’s Eurozone data and European Central Bank (ECB) anticipation has done little to bolster demand.
Pound (GBP) Exchange Rates Limp as Investors await Brexit Breakthrough
Demand for the Pound (GBP) has been mixed since markets opened this week, as Friday’s current formal Brexit date is approaching without the UK having found any resolution to the process.
While some hope for a delay to Brexit, or that cross-party negotiations in Britain could make a softer exit more likely, Pound demand has been limited amid fears that no progress will be made this week, and that the UK will leave without a deal.
If there is no agreement, or if there is a Brexit delay, the default outcome is for the UK to leave the EU this week without a deal and revert to Word Trade Organisation (WTO) rules.
This is considered to be negative for businesses and markets, at least in the short term. While analysts predict that a Brexit delay is likely, the lack of certainty that one will be agreed is keeping pressure on the Pound.
Danish Krone (DKK) Exchange Rates Mixed Ahead of European Central Bank (ECB) Decision
The Euro (EUR)-pegged Danish Krone (DKK) has also seen mixed demand since markets opened this week.
Eurozone data paints a mixed picture for the Eurozone’s economic outlook, making investors more hesitant to buy the Euro or Danish Krone as they anticipate tomorrow’s key European Central Bank (ECB) policy decision.
Following underwhelming Eurozone manufacturing and trade data last week, the Danish Krone did find a little support at the beginning of the week as Eurozone investor confidence reportedly improved more than expected.
In terms of data, this morning’s Danish trade balance report from February printed a larger than expected trade surplus. This had limited impact on DKK movement however, with investors more focused on Eurozone news.
Pound to Danish Krone (GBP/DKK) Exchange Rate Awaits Wednesday Developments
Wednesday is looking to be the most pivotal session this week for the Pound to Danish Krone (GBP/DKK) exchange rate, and possibly one of the most pivotal this year so far depending on how the Brexit process unfolds.
UK Prime Minister Theresa May is hoping to secure another delay to the Brexit process and analysts believe one is likely. It is expected that the details of any delay will become clearer during an EU summit on Wednesday.
May wants a short delay until the 30th of June, but it is expected that the EU would prefer a longer delay of up to a year.
If a Brexit delay is agreed, the Pound (GBP) would at least see some relief that may help it to climb on hopes of a softer Brexit. A lack of a delay would instead cause no-deal Brexit fears to surge and GBP/DKK to fall.
The Danish Krone (DKK), on the other hand, will be driven by the Euro’s (EUR) movement on Wednesday as the European Central Bank (ECB) will hold its April policy decision.
Following weeks of mixed Eurozone data, a more cautious or dovish ECB would lead to Euro weakness, which would make it easier for Pound to Danish Krone (GBP/DKK) exchange rate gains.