GBP/DKK Exchange Rate Edges Higher as Denmark’s Economy Struggles
The Pound to Danish Krone (GBP/DKK) exchange rate rose by 0.3% today, with the pairing currently trading around 8.142kr.
Today will see the Danish government submit its second emergency coronavirus law to the Danish Parliament. This will allow police to take further action to help curb the spread of the virus.
Søren Brostrøm, the Director General of the Danish Health Authority, was hopeful that Denmark’s new measures would result in a flat curve, commenting:
‘[W]e have presented our risk assessment of the epidemic. We expect it to peak in four weeks. We are hoping for a long and flat curve, because we betting on the effect of the measures we have taken.’
Last week saw 23,000 Danes register as unemployed, quadrupling the usual number in a remarkably short period of time.
Furthermore, with the Danish economy now facing a sharp downturn and analysts predicting the crisis to cut Denmark’s GDP by over 155 billion kroner – 6.7% of the total GDP – the outlook for the Danish Krone looks increasingly dim.
Pound Rises, But Could Further BoE Stimulus Measures Strengthen GBP Today?
The Pound (GBP) edged higher today as markets await the Bank of England’s (BoE) interest rate decision and monetary policy meeting. However, Andrew Bailey, the bank’s newly appointed Governor, has previously said that the bank wouldn’t cut below its all-time low of 0.1%.
Analysts at Reuters commented:
‘Instead, they are likely to underscore their determination to take more radical measures – probably a further increase in their quantitative easing programme – if needed to steer Britain’s economy out of its expected slump.’
Any further measures to bolster the UK’s economy through the coronavirus crisis would prove Pound-positive.
Morgan Stanley, an economist at Jacob Nell, commented:
‘Should the outbreak – and the associated economic hit – be more prolonged than anticipated, we think that both the Bank of England and the Treasury could ramp up their response, with more spending and more QE.’
Some analysts, however, remain unconvinced that the UK’s government’s efforts to stimulate the British economy have gone far enough.
Sterling’s gains against the Danish Krone may be short lived as the nation’s economic situation continues to deteriorate due to the Covid-19 crisis.
GBP/DKK Forecast: Could Tougher Danish Coronavirus Laws Weaken the Danish Krone?
Sterling’s gains for the rest of this week will likely be dictated by the Bank of England’s decision today. Any further quantitative easing measures and spending would boost the GBP/DKK exchange rate as the UK’s economic outlook improves.
Danish Krone (DKK) traders will continue to eye the Danish government’s response to the nation’s coronavirus outbreak. If the government is granted increasingly more draconian measures to curb the spread of Covid-19, we will see DKK suffer from rising fears for the economy.