GBP/DKK Exchange Rate Falls as Danish Economy Fares Well
The Pound to Danish Krone (GBP/DKK) fell by -0.4% today, with the pairing currently fluctuating around 8.352kr as concerns over a possible no-deal Brexit on December 31st weigh on Sterling.
The Danish Krone (DKK) rose today following this week’s announcement of Denmark’s $1.5 billion (1.13 billion pounds) ‘war chest’ to help the nation secure access of a future Covid-19 vaccine.
Denmark’s Finance Minister Nicolai Wammen was also notably upbeat about the Danish economy, saying that the downturn ‘has not been as bad as in many other countries’.
Denmark’s small export-driven economy remains vulnerable, however, owing to a downturn in its core export destinations.
Meanwhile, Denmark’s Financial Ministry has predicted the nation’s GDP to fall by -4.5% this year, instead of its May forecast of a largest -5.3% contraction. The Ministry was more optimistic about 2021, however, expecting the GDP to grow by 4.2%.
Pound (GBP) Falls on Escalating No-Deal Brexit Fears
The Pound (GBP) fell today owing to deepening concerns over the possibility of a no-deal Brexit on December 31st. This follows comments from Michel Barnier, the EU’s Chief Brexit Negotiator. Barnier expressed disappointment about the lack of progress in talks.
Speculation has grown over the ongoing impasse between the UK and the EU following an informal UK-EU meeting on Tuesday.
Mr Barnier said to the Institute of International and European Affairs in Dublin:
‘We didn’t see any change in the position of the UK, which is why I expressed publicly what I say, that I am worried and I am disappointed because, frankly speaking, we have moved, [and] shown in many issues real openness in the past months.’
In UK economic news, today saw the release of August’s Services PMI figure, which remained strong at 58.8. As a result, some GBP investors are becoming increasingly optimistic about Britain’s economic recovery over autumn.
Duncan Brock, the Group Director at the Chartered Institute of Procurement and Supply, was upbeat about the data, saying:
‘As the UK economy continues to wake from its pandemic slumber, the services sector reported a higher than expected rise in new orders and at the strongest levels since December 2016. Buoyed up by increased consumer spending from domestic markets and unfettered by lockdown measures, businesses continued to be optimistic even though obstacles to stronger growth lingered on.’
GBP/DKK Outlook: Could Concerns Over a No-Deal Brexit Drag Sterling Down Deeper?
Pound (GBP) investors will be awaiting tomorrow’s release of the latest UK Construction PMI figure for August. If this shows any signs of improvement, then we could see Sterling head higher on growing optimism for the economy.
Danish Krone (DKK) investors will be focusing on global economic developments. Any signs of US-China trade tensions improvement could buoy confidence in Denmark’s trade-reliant economy. As a result, we could see DKK rise.
The GBP/DKK exchange rate could also slip on growing concerns over a possible no-deal Brexit at the end of year. A lack of progress in UK-EU trade negotiations, therefore, would prove GBP-negative.