GBP/DKK Exchange Rate Rangebound on Heightened 2020 BoE Rate Cut Fears
The Pound Danish Krone (GBP/DKK) exchange rate held steady today, with the pairing currently trading around 8.666Kr after two members of the Bank of England’s (BoE) Monetary Policy Committee (MPC) voted for a rate cut to ward off a possible economic slowdown.
Although the BoE held interest rates at 0.75% today, divided opinion among MPC members increased speculation for a 2020 rate cut and dampened market confidence in Sterling.
Peter Dixon, an Economist at Commerzbank, said he now expects the BoE to go ahead with a rate cut soon. He added:
‘I think it makes sense to keep their powder dry until we see where we are, if and when Brexit decision actually takes place, because if it goes wrong, the Bank is going to need all the [stimulus] ammunition it can get.’
British political news has continued to dominate headlines today, with the Tories still leading in polls as the major parties outline their spending plans ahead of the 12th December general election.
DKK/GBP Exchange Rate Steady, Danish Industrial Production Rises
The Danish Krone (DKK) failed to gain on the Pound (GBP) despite this morning’s Danish industrial production figure for September, which rose from -1.1% to 1.5% with Denmark’s pharmaceutical industry boosting productivity growth.
Danish markets remain cautious as the German economy shows persistent signs of entering a technical recession. As Europe represents one of Denmark’s major trading partners, the Eurozone’s economic woes weighed on the Danish Krone.
Thomas Gitzel, an Economist at VP Bank, commented:
‘The decline in [Germany’s] industrial production in September makes a technical recession almost official now.’
However, improving US-China trade relations could boost the Danish Krone to Pound exchange rate, with improving global trade developments strengthening Denmark’s export-reliant economy.
GBP/DKK Outlook: Could Danish Krone Sink on Fears for EU Economy?
With no Danish economic data due out until next week, Danish Krone traders will pay close attention to the Eurozone’s economic developments.
If Germany’s trade balance for September sinks below consensus tomorrow, we could see the DKK/GBP exchange rate suffer on heightened fears for a knock-on effect on the Danish economy.
Meanwhile, Sterling traders will focus on British political developments into the weekend, with any signs of the Tories cementing their 15 point lead in the polls boosting Sterling as a sense of political certainty returns.