GBP/DKK Exchange Rate Drops as Easing Geopolitical Tensions Boosts Danish Krone
The Pound Danish Krone (GBP/DKK) exchange rate fell by -0.4% today, leaving the pairing trading around 8.072Kr despite falling Danish industrial production figures for June.
Danish industrial production fell from 3.5% to -6.8% – their first drop in 4 months.
Denmark’s suffering industry mirrors a similar slowdown in the Eurozone, and reflects today’s sink in German industrial production for the same month.
However, the Danish Krone benefited today from easing US-China trade tensions, which provided some uplift to DKK. The Danish economy relies heavily on exports and imports which constitute half the country’s Gross Domestic Product (GDP).
Tensions between the US and China eased after the White House Economic Advisor, Larry Kudlow, said that President Donald Trump was open to a trade deal.
Mr Kudlow said:
‘The reality is [the US Government] would like to negotiate. We’re planning for the Chinese team to come here in September. Things could change with respect to the tariffs… [Donald Trump] would like to make a deal… We would much prefer a commercial transaction.’
GBP/DKK Exchange Rate Sinks as No-Deal Brexit Fears Rise After UK-EU Negotiations Breakdown
The Pound (GBP) has continued to fall on heightened no-deal Brexit fears after former Environment Secretary Michael Gove said the EU was unwilling to open up negotiations on the withdrawal agreement.
Mr Gove said:
‘[The Government] will put all our energy into making sure that we can secure that good deal but at the moment it is the EU that seems to be saying they are not interested. They are simply saying: ‘No, we don’t want to talk.’ I think that is wrong and sad. It is not in Europe’s interests.’
Sterling traders are becoming increasingly jittery as both the UK and EU now seem to be working on the assumption of a disorderly exit in October.
Meanwhile, today saw the publication of the Halifax House Prices figures for July, which fell below the expected 0.3% increase to -0.2%. Year-on-year figures also eased from 5.7% to 4.1%.
Howard Archer, a Consultant at EY ITEM Club, said:
‘With Brexit due to occur on 31 October – and it currently very unclear what will happen then –uncertainty will weigh down on the economy over the next few months at least and hamper the housing market.’
GBP/DKK Outlook: Sterling Could Fall Further on Heightened No-Deal Brexit Fears
Danish Krone (DKK) traders will be looking ahead to Friday’s publication of the Danish Trade Balance figures for June.
Any signs of improvement could further bolster the Danish Krone to Pound exchange rate.
Meanwhile, Sterling traders will be looking ahead to tomorrow’s release of the UK RICS Housing Price Balance figures for July. These are expected to hold at -1%.
The GBP/DKK exchange rate will likely remain volatile this week as UK-EU Brexit negotiations remain in focus and UK markets become increasingly jittery over no-deal fears.