Pound to Danish Krone Exchange Rate Limp after Last Week’s Tumble
Thanks largely to broad weakness in the Pound (GBP), the Pound Sterling to Danish Krone (GBP/DKK) exchange rate tumbled last week. Key data later in the week could influence both currencies if they impact coronavirus outlooks.
After opening last week at the interbank level of 8.30, GBP/DKK briefly rose. However, towards the end of the week GBP/DKK was hit lower by Britain’s concerning outlook.
GBP/DKK closed the week at the interbank level of 8.23. When markets opened this morning, GBP/DKK briefly dipped to a low of 8.16 – the worst level for the pair since March.
Amid a lack of much support for the Pound, the pair has been limp so far this morning. Investors await coronavirus developments and data due later in the week.
Pound (GBP) Exchange Rates Hit by Gloomy Coronavirus Outlook
Pound (GBP) investors had already been anxious about Britain’s outlook. This is due to criticism over the government’s handling of the coronavirus pandemic, as well as fears that Brexit negotiations will end with a no-deal outcome.
Last week’s UK news only added to market concerns however. The Bank of England (BoE) didn’t see a unanimous vote on quantitative easing (QE), which led to concerns that the bank was not willing to do whatever it took against the coronavirus.
This was followed on Friday by shock that UK government borrowing had hit record-highs. It served as the latest evidence that Britain’s economy would continue to struggle under the coronavirus pandemic.
According to Kit Juckes, Chief Global FX Strategist at Societe Generale:
‘UK public sector finances for May show how heavy the cost of the pandemic has been in the first two months of the fiscal year,’
Danish Krone (DKK) Exchange Rates Struggle as Investors Increasingly Avoid Risks
While the Pound (GBP) has been falling in recent weeks, further GBP/DKK losses may be limited.
The Danish Krone (DKK) is a currency sometimes correlated to market risk and trade-sentiment. This is because Denmark’s enonomy is reliant on oil markets.
With oil prices struggling to see much solid recovery in recent sessions and global coronavirus fears worsening, the Danish Krone’s appeal is limited.
Fears of a global ‘second wave’ of coronavirus infections are keeping pressure on assets correlated with risk and trade.
This morning’s stronger-than-expected Denmark consumer confidence didn’t offer the Krone much strength either. Confidence improved from –8.8 to –3.1 in June, rather than the expected figure of around –7.
Pound to Danish Krone (GBP/DKK) Exchange Rate Awaits Data’s Influence on Coronavirus Outlook
Due to market risk-aversion, the Pound to Danish Krone (GBP/DKK) exchange rate is avoiding losses today.
However, demand for the Pound (GBP) is limited overall. The British currency is more likely to see stronger demand if upcoming UK data impresses.
Tomorrow will see the publication of Britain’s June PMI projections. They will give investors a better idea of how Britain’s economy is performing amid the coronavirus pandemic.
If the PMIs fall short of expectations, they could worsen concerns over how long the coronavirus will hurt Britain’s economy. Strong data could boost economic hopes and the Pound though.
As for the Danish Krone (DKK), Denmark’s May retail sales data will be published later in the week.
Global coronavirus developments, as well as shifts in risk and commodity-sentiment, will also influence the Pound to Danish Krone (GBP/DKK) exchange rate.