GBP/DKK Exchange Rate Slips, No-Deal Brexit Fears Return after PM’s European Visit
The Pound Danish Krone (GBP/DKK) exchange rate eased to 8.222Kr today following diminished confidence in Prime Minister Boris Johnson’s ability to negotiate a deal with the EU.
This came despite an unexpectedly affable visit with French President, Emmanuel Macron – formerly an abrasive critic of Johnson.
Despite a hospitable French reception, Macron followed the meeting by reiterating a less yielding position, describing the Irish backstop as ‘indispensable’ to European economic and political stability and placing the onus firmly on Johnson to find a suitable alternative before October 31st.
Meanwhile some Pro-leave Tories have been critical, suggesting the backstop is just one of many changes required in order for a withdrawal agreement to pass the scrutiny of Parliament. Sir Bill Cash, a Conservative MP and prominent Eurosceptic, commented:
‘You can’t restore self-government as a cut and paste operation and I am sure they understand that – taking parts of the withdrawal agreement. We will be governed for a number of years by the other 27 member states under the existing draft withdrawal agreement … even with the backstop removed.’
Others have described the apparent optimism of the German and French premiers as a cynical attempt to indemnify themselves against blame should a no-deal Brexit transpire.
Pound traders remain increasingly jittery as progress towards any kind of consensus still appears to be a long way off, with only thirty nine days to go until the Brexit deadline expires.
DKK/GBP Exchange Rate Rises as Danish Consumer Confidence Improves
The Danish Krone (DKK) edged higher following yesterday’s publication of the Danish consumer confidence figure for August. The gauge showed an impressive increase from 2.9 to 6.3.
Louise Aggerstrøm Hanse, an Economist at Danske Bank, was upbeat about the Danish economy:
‘We have relatively high disposable income. We are being paid more and inflation is low… At the same time, interest has fallen hugely in recent months and that means lower interest costs for homeowners and more breathing space financially.’
However, many DKK traders remain wary as the looming spectre of a global recession and political uncertainties across the Eurozone continue to weigh on the Danish economy.
Tore Stramer, a Lead Economist at Nykredit, commented on the uptick in Danish consumer confidence and its wider implications:
‘It’s a pleasant surprise. You could have been worried that, with increasing risk of global slowdown, Danes would be more cautious.’
GBP/DKK Outlook: Could Pound Sink Further as No-Deal Brexit Fears Return?
Danish Krone investors will be looking ahead to Monday’s publication of the retail sales figure for July. Following on from the improvement in consumer confidence, any signs of an increase could further bolster confidence in the Danish economy.
Meanwhile, Pound traders will remain focused on Brexit, potentially subduing the GBP/DKK exchange rate into next week.