Pound Danish Krone Exchange Rate Edges Higher after Week of Poor Performance
Investors have been buying the Pound (GBP) back from lows today, but the Pound Danish Krone (GBP/DKK) exchange rate’s recovery is limited. Strong Eurozone data today is supporting the Danish Krone (DKK), which is pegged to the Euro (EUR) and correlates to Euro movement.
After opening this week at the interbank level of 8.33, GBP/DKK tumbled and spent much of the week trending lower.
While GBP/DKK has recovered slightly from lows of 8.19, the pair is still trending well below the week’s opening levels in the region of 8.25 at the time of writing.
The Pound’s recovery attempts are limited due to a lack of strong fresh support in the Pound outlook.
Pound (GBP) Exchange Rate Recovery Attempt Seen as Temporary
The Pound has been rebounding from its worst levels today. However, its gains are being seen by markets as limited and temporary.
At the beginning of the week, the Pound was knocked lower by news that Britain would enter a third national lockdown. The coronavirus pandemic is expected to hit the UK economy harder than other major economies in the coming months.
Since then, there has been little UK news to make the Pound more appealing to investors.
What’s more, speculation that the Bank of England (BoE) could soon use negative interest rates kept further pressure on the Pound’s appeal.
Speaking about the Euro to Pound exchange rate, Strategists at ING said:
‘While we still see room for Euro-Sterling to mildly drop below the 0.9000 level, this should be limited given the rising risk of further Bank of England easing, while Sterling is to benefit less from the conducive global risk environment in comparison to its European cyclical peers such as Sweden’s krona or Norway’s krone.’
Danish Krone (DKK) Exchange Rates Supported by Today’s Eurozone Unemployment Stats
The Danish Krone is pegged to the Euro. This means it moves as the Euro does, and as a result its movements revolve around what moves the Euro.
Today saw the publication of the Eurozone’s key November unemployment rate. Rather than worsening to 8.5% as expected though, the figure improved to 8.3%.
The data helped the Euro to strengthen following some weaker Eurozone data earlier in the week.
— LiveSquawk (@LiveSquawk) January 8, 2021
Pound Danish Krone (GBP/DKK) Exchange Rate Recovery Looking Temporary
While the Pound is attempting to rebound today, its appeal is limited amid a lack of upside drive. Without more optimistic UK news, investors may continue to see little reason to buy Sterling.
Unless there is an improvement in Britain’s coronavirus outlook, the Pound could be driven more by rival movement in the coming sessions. The Danish Krone will of course be influenced by Euro movement, so GBP/DKK could be a Euro story for much of next week.
Eurozone industrial production is due on Wednesday. The Euro and Danish Krone could also be driven by shifts in demand for the Euro’s biggest rival, the US Dollar (USD).
If there are no UK coronavirus surprises in the coming week, Sterling could still be influenced by UK growth and production data due on Friday.
Of course, developments in the pandemic and global politics remain a potential cause of Pound Danish Krone exchange rate movement as well.