Pound Sterling Danish Krone (GBP/DKK) Exchange Rate Muted despite Rising UK Election Optimism
The Pound Sterling Danish Krone (GBP/DKK) exchange rate remained muted, leaving the pairing trading at around 8.8760Kr.
With just a few days left until the UK general election, traders continued to remain optimistic that the Conservative Party would secure a majority.
This buoyed Sterling, allowing the currency to rise to a three-year high against the Danish Krone.
Further opinion polls revealed support for Boris Johnson’s party continued to grow, with the Tories around 10 points ahead of Jeremy Corbyn’s Labour party.
On Monday, Survation’s opinion poll showed the gap between the parties had extended to 14 points, which provided GBP with support.
However, in the afternoon the pairing was left flat as some analysts warned that there is still a chance of a hung parliament.
Added to this, many questioned whether the Prime Minister would be able to make a clean break from the EU by the end of 2020 if he retains power.
Commenting on this, MUFG Analyst, Lee Hardman said:
‘[This] points towards the likely need for an extension to the transition period beyond the end of next year, something Boris Johnson has pledged not to request.
‘It leaves open the risk of a no-deal Brexit towards the end of next year. Once the initial euphoria fades over a positive UK election outcome, it will become more challenging for the pound to extend its advance in 2020.’
Danish Krone (DKK) Claws Back Losses after Surprise Rise in Exports
As the Danish Krone is pegged to the Euro, the pairing was able to claw back earlier losses following a surprise rise in German exports.
Providing some much needed relief to the bloc’s largest economy, the increase in German exports followed last week’s disappointing industrial data.
October’s increase in exports also sparked hopes that the weak manufacturing sector could potentially avoid contraction in the final quarter.
Commenting on today’s data, Carsten Brzeski from ING said:
‘Today’s trade figures are the first positive data for the final quarter of the year. With disappointing consumption and industrial data but encouraging trade data, the economy will remain on a bumpy road between contraction, stagnation and meagre growth.’
Meanwhile, further data showed that Denmark’s trade surplus widened to 7.3 billion Danish Krone in October.
Exports rose by 3.8% compared to a year earlier, buoyed by a 32.3% increase in the sales of chemicals and related products, along with a 7.8% increase in live animals, food, beverages and tobacoo.
Pound Danish Krone Outlook: Will Inflation Buoy DKK?
Looking ahead to Tuesday the Danish Krone (DKK) could edge higher against the Pound (GBP) following the release of Denmark’s inflation rate.
If inflation rises higher than expected, it could provide an upswing of support for the Krone.
Meanwhile, Sterling could edge lower following the release of the UK’s GDP data.
If data shows the economy did not expand as much as forecast in October, the Pound Danish Krone (GBP/DKK) exchange rate is likely to slide.