Danish Covid-19 Mink Mutation Drags Down Danish Krone (DKK)
The Pound to Danish Krone (GBP/DKK) exchange rate held steady this morning, with the pairing currently trading around 8.249kr.
The Danish Krone (DKK) has suffered in the past week after Denmark announced a Covid-19 lockdown following an outbreak of the virus in mink farms.
Danish Prime Minister Mette Frederiksen recently announced a closure of schools and public transport where the mink farms are located.
‘It is very, very serious. Thus, the mutated virus in minks can have devastating consequences worldwide’.
With the mink skin industry one of Denmark’s largest economic contributors, this has sparked concerns for the Danish economy in the months ahead.
Pound (GBP) Steady as Brexit Deal Hopes Boosted by US Election Result
The Pound (GBP) benefited from news of the US President-Elect Joe Biden’s victory over the weekend, with investors now more optimistic for a UK-EU Brexit deal.
Prime Minister Boris Johnson’s former cabinet colleague, Baroness Nicky Morgan, commented:
‘I think the PM will not want the first conversation he has with Biden to be about Northern Ireland, Brexit and no deal. Getting a deal will make that conversation much easier.’
As a result, GBP traders are becoming more hopefully that the added pressure following the US elections could result in a trade agreement between the European Union and the United Kingdom.
However, with the UK economy expected to struggle in the fourth quarter owing to the nationwide Covid-19 lockdown, British markets are remaining generally cautious.
Gerwyn Davies, the senior labour market adviser at the CIPD, commented:
‘The best that can be said is that the situation is getting worse more slowly. Employment looks set to keep falling and the relatively weak demand for labour means that it is going to be a long and hard winter, affecting young jobseekers in particular.’
GBP/DKK Outlook: Could an Increased Likelihood of a Brexit Trade Deal Boost Sterling?
Pound (GBP) traders will be awaiting tomorrow’s release of the latest UK Unemployment Rate report.
Any significant increase in joblessness would progress GBP-negative.
Tomorrow will also see the release of October’s UK BRC Retail Sales report, which is forecast to rise by 8.4%.
Danish Krone (DKK) traders will be awaiting tomorrow’s publication of the latest Danish inflation rate for October.
If this points to a downturn in Denmark’s economy, then the DKK/GBP exchange rate could suffer.
Nevertheless, GBP investors will be focusing on Brexit developments.
If these show any signs of a UK-EU concession on a post-Brexit trade agreement, then the GBP/DKK exchange rate could head higher.