Pound Sterling Danish Krone (GBP/DKK) Exchange Rate Muted as Debt Surpasses £2 Trillion
The Pound Sterling Danish Krone (GBP/DKK) exchange rate remained flat on Friday morning. This left the pairing trading at around 8.2944Kr.
Sterling was offered an upswing of support this morning after the latest UK retail sales data impressed investors.
Sales rose above their pre-coronavirus levels in July. This was the first full month that shops selling non-essentials were open. This caused sales volumes to rise by a higher-than-forecast 3.6%.
The data represented a strong recovery from the double-digit declines seen in April and May.
Meanwhile, the latest PMI data offered further support as the data revealed the recovery amongst British businesses quickened again this month.
However, gains were quickly reversed after reports revealed Britain’s public debt surpassed £2 trillion for the first time.
This underscored the latest challenge for Chancellor, Rishi Sunak who is under pressure to provide further emergency support for the coronavirus-hit economy.
UK Flash PMI Jumps to 82-Month High
Sterling received a boost, as the flash PMI composite jumped to an 82-month high of 60.3. Separately, manufacturing hit a 30-month high while the services PMI jumped to a 72-month high.
However, the data showed increased concerns with the speed and duration of the of recovery. This resulted sustained job cuts this month. The data indicated August’s figures will lead to the fastest pace in employment numbers since May.
Added to this, gains were soon reversed following data on UK public borrowing.
Commenting on this morning’s data, Tim Moore, Markit’s Economics Director noted:
‘August’s data illustrates that the recovery has gained speed across both the manufacturing and service sectors since July. The combined expansion of UK private sector output was the fastest for almost seven years, following sharp improvements in business and consumer spending from the lows seen in April.
‘There were encouraging signs that customer-facing service providers have started to catch up with the rebound seen earlier this summer across the wider economy, with easing lockdown measures, staycations and the Eat Out to Help Out scheme all reported as factors supporting growth in August.
‘Positive signals for the recovery of course need to be considered in the context of UK GDP shrinking by around one-fifth during the second quarter of the year. Survey respondents often noted that it could take more than a year to return output to pre-pandemic levels and there were widespread concerns that the honeymoon period for growth may begin to fade through the autumn months.’
Danish Krone (DKK) Slides as Consumer Confidence Falls
Meanwhile, the Danish Krone was left under pressure this morning after the latest consumer confidence disappointed investors.
The country’s confidence index slumped to -5.5 in August, down from July’s reading of -2.9. This was the weakest reading since May which dampened sentiment.
Downbeat confidence was due to a deterioration in the general economic situation in Denmark.
Added to this, consumers largely expect unemployment in Denmark to increase in a year.
Pound Danish Krone Outlook: Brexit Talks in Focus
Looking ahead, the Pound (GBP) could edge higher against the Danish Krone (DKK) as traders focus on the latest round of Brexit talks.
If reports reveal the latest round of Brexit talks have progressed well and the two sides are closer to reaching a free trade agreement, Sterling will jump. This will send the Pound Danish Krone (GBP/DKK) exchange rate higher.