Pound Danish Krone Exchange Rate Struggles to Recover
Despite a weaker Euro (EUR) and Danish Krone (DKK) today, the Pound Sterling to Danish Krone (GBP/DKK) exchange rate is struggling to mount a recovery. The Danish Krone is pegged to the Euro, so it experiences the same forex movement the Euro does.
After opening last week at the interbank level of 8.32, GBP/DKK spent the week trending lower. After recovering from the week’s low of 8.91, GBP/DKK closed the week at the level of 8.25.
Since markets opened this week, GBP/DKK has been trending with a slight downside bias as the Pound (GBP) remains weak. At the time of writing, GBP/DKK trends just below the week’s opening levels in the interbank region of 8.24.
With economic calendars a little quieter this week, markets may be more focused on coronavirus and central bank developments.
Pound (GBP) Exchange Rates Unappealing amid Market’s Coronavirus and Central Bank Jitters
The Pound is still feeling sore from Britain’s coronavirus situation today, amid no solid signs of recovery.
Despite Britain entering its third national lockdown last week, UK infection rates remain near their highest on record. This has led to concerns that Britain’s restrictions could become even stricter.
Britain’s dire coronavirus situation is keeping the Pound unappealing. On top of this, speculation of negative interest rates from the Bank of England (BoE) are further weighing on Sterling.
According to Strategists at RBC:
‘Combined with the negative effects of Brexit, it means we continue to expect that the Bank will ultimately be forced to take rates negative,’
Danish Krone (DKK) Exchange Rate Demand Softens amid US Dollar Rebound
The Euro’s strength has been a little softer since markets opened today. As a result, the Danish Krone’s appeal has been limited as well.
The Euro’s rival, the US Dollar, has seen a rebound in demand. This is due to rising coronavirus fears, US Treasury yields, and expectations of more fiscal stimulus from the upcoming US Joe Biden administration.
Gains in its rival have limited the Euro’s appeal. Still, the Euro remains more appealing than the Pound due to the Eurozone’s more resilient coronavirus outlook.
Today’s Denmark data, including trade balance and inflation rate stats, were a little weaker than expected. This had no notable impact on the Danish Krone’s movement however.
Pound Danish Krone (GBP/DKK) Exchange Rate Could Fall on BoE Fears
Much of this week’s UK and Eurozone economic calendar will be quiet. Some Eurozone production stats on Wednesday could cause Euro and Danish Krone movement, but besides that other factors will be more of a focus.
The Pound will be focused on coronavirus developments and Bank of England (BoE) speculation. If any BoE officials signal that negative interest rates are possible, GBP/DKK could be in for even further losses.
On the other hand though, any signs of improvement in Britain’s coronavirus situation could soften UK economic and BoE concerns and help the Pound to recover.
The Danish Krone will be driven largely by movement in the Euro’s rivals, like the Pound and US Dollar.
If the US Dollar recovery surges higher, the Danish Krone will be pressured and GBP/DKK will recover more.
Of course, BoE negative interest rates speculation and continued US Dollar weakness could mean the Pound Danish Krone exchange rate simply remains under pressure.