Pound Danish Krone (GBP/DKK) Exchange Rate Left Flat as UK Economy Shrinks
The Pound Danish Krone (GBP/DKK) exchange rate was left flat on Thursday, with the pairing currently trading at around 8.2910kr as data showed the UK economy shrank by -0.1% in August.
The Office for National Statistics (ONS), meanwhile, revealed that in the three months to August the economy expanded by a better-than-expected 0.3% due largely to an upward revision of June and July’s inflation figure.
Commenting on the data, KPMG UK chief economist, Yael Selfin noted:
‘Despite the contraction in GDP in August, the risk of the UK economy falling into a technical recession is still remote, due to strong growth in July. Also a potential new round of stockpiling will likely help boost GDP growth in September and October.
‘The latest figures are still a cause for concern however, especially as most of the fall comes from the manufacturing sector, which is particularly vulnerable to an adverse Brexit outcome.’
Danish Krone (DKK) Muted as Transport Buoys Danish Inflation
The Danish Krone (DKK) was left muted against the Pound (GBP) as Danish inflation rose from 0.4% to 0.5% in September. The highest inflation rate since June was buoyed by positive figures in the transport, restaurant and hotel sectors.
The country’s harmonized index of consumer prices slowed from 0.5% in August to 0.4% year-on-year in September.
Meanwhile, increasing US-EU trade tensions placed the Krone under pressure as France’s Finance Minister, Bruno Le Maire said the bloc would impose sanctions on US products if a settlement was not reached.
Speaking to reporters, Le Maire said:
‘The American administration should be aware that if there is no settlement, Europe will not have any other choice but to retaliate and to [use] sanctions.’
Sterling (GBP) Flat Ahead of UK-Ireland Brexit Talks
The Pound saw wild swings on Wednesday as news of a breakthrough in the Irish backstop boosted market confidence. Sterling subsequently slumped as EU officials refuted the claims.
The Times report announced that EU officials were prepared to offer the Northern Irish assembly a mechanism allowing them to leave the backstop after a number of years, a mechanism the Democratic Unionist Party (DUP) instantly rejected.
Sterling slid as the EU denied any such concession had been made, with one official stating, ‘no bold new offer is coming from the EU side at this stage’.
Meanwhile, Prime Minister Boris Johnson and his Irish counterpart, Leo Varadkar are scheduled to meet to discuss Brexit and the Irish backstop.
According to Downing Street, the meeting will allow for ‘detailed discussions’ on attempts to secure a deal, with the Prime Minister noting that he remains ‘cautiously optimistic’ about reaching an agreement with the EU before the Halloween deadline. GBP investors showed some doubt in Johnson’s positivity as the Pound continued to struggle into the end of the week.
Pound Danish Krone Outlook: Will EU Decision Send GBP Lower?
Looking ahead, the Pound is likely to slide against the Danish Krone toward the top of the week as Brexit reaches a watermark. French President Emmanuel Macron has stated the EU will give its official verdict on the British Prime Minister’s deal on Friday and with a broad rejection of the ‘final’ proposal expected, a no-deal outcome appears inevitable.