Pound Danish Krone (GBP/DKK) Exchange Rate Muted as MPs Reject Fast-Track Brexit Bill
The Pound Danish Krone (GBP/DKK) exchange rate was left flat today, with the pairing currently trading at around 8.6330kr.
British lawmakers approved Boris Johnson’s Withdrawal Agreement bill on Tuesday, vaulting the first parliamentary hurdle with 329 to 299 votes in favour. But MPs then rejected the Prime Minister’s plans to fast-track the bill by a majority of 14.
Following the pivotal votes, European Union Council, President Donald Tusk said he would recommend EU leaders back an extension to Article 50 but failed to say how long the extension might be.
The Prime Minister ‘paused’ the bill as parliament awaits an EU response to his extension request, but warned that another Brexit delay could trigger a general election, something likely to infuse GBP exchange rates with further volatility.
CMC Markets’ Michael Hewson noted that the government had not yet abandoned the legislation, and added:
‘Importantly, Boris Johnson said that the UK would leave the EU with this deal come what may, but did not stick to his Oct 31st do-or-die mantra.
‘This could be an important, indeed key shift in the government’s position as it may indicate a willingness to extend and then seek to get the bill through parliament. My initial thoughts are that the government will let the EU offer the extension to get the bill through, and Boris can square the circle later with amendments etc.’
Danish Krone (DKK) Muted as Confidence Left Near a Three-Year Low
The Danish Krone (DKK) was left muted against a Brexit-battered Pound (GBP) as Danish consumer confidence recorded its lowest reading since December 2016.
The weaker than expected consumer confidence declined to 1.7 in October, while additional data revealed declining confidence in financial situations and saving prospects for Danish households.
Threat of a General Election Leaves Sterling (GBP) Flat
The Pound came under pressure against the Danish Krone today as investors sit on their hands ahead of the EU decision on a Brexit extension.
Markets remain optimistic that the UK will avoid a worst-case no-deal scenario, but traders still lack much-needed clarity and Boris Johnson has made it clear that if a January extension is granted he will push for a general election.
This would cause further uncertainty in an already uncertain market and the longer the delay, the further the Pound is likely to slide against the Danish Krone.
Commenting on this, head of foreign exchange strategy at Saxo Bank, John Hardy said:
‘[There are] at least another few weeks of political fighting over amending details of the Brexit deal and possibly a UK general election.
‘It seems clear that Brexit will happen, but the further the delay could inflict additional damage on an already struggling UK economy if investment decisions are held back. Sterling got no boost from the first vote and saw a fairly orderly consolidation on the second vote.’
Pound Danish Krone Outlook: Will GBP Slide as Boris Pushes for a General Election?
Looking ahead to the rest of the week, Brexit will act as the main catalyst for Sterling movement.
If the EU proposes to delay Brexit until January the Pound could edge down against the Danish Krone as this would leave markets in limbo. Meanwhile, a snap general election would exacerbate uncertainty and tip the Pound Danish Krone (GBP/DKK) exchange rate lower.