Pound Danish Krone Exchange Rate Holding Above Worst Levels but Weakness Persists
Fresh panic over a new coronavirus strain reported in Britain is throttling the Pound Sterling to Danish Krone (GBP/DKK) exchange rate again. The Danish Krone (DKK) is pegged to the Euro (EUR), so it moves largely in relation to news that is moving the Euro.
Since markets opened this week, GBP/DKK has seen a sharp fall as Brexit and coronavirus fear throttles Sterling (GBP).
GBP/DKK opened this week at the level of 8.20 and quickly plummeted all the way to 8.07. This was the worst level for GBP/DKK since September, 3 months ago.
While GBP/DKK has rebounded slightly from those worst levels, it is still trending in the region of 8.11 which is below last week’s levels.
Unless there is an optimistic development in the Brexit process, the Pound may be in for further losses in the coming weeks.
Pound (GBP) Exchange Rates Plummet on Combination of Brexit and Coronavirus Fear
Last week saw Sterling climbing on hopes that the UK and EU were closing in on a Brexit deal. However, as it became clearer a deal was not ready after all, the Pound’s appeal faded.
Rising no-deal Brexit fears combined with another shock are keeping the Pound even weaker today.
Over the weekend, reports emerged that a new strain of the coronavirus had emerged in South-East England. This new strain is said to spread faster.
The UK government has implemented stricter lockdowns in the South-East and London as a result. This briefly led to trade being halted as well, as the EU blocked transport to and from Britain.
Sterling plummeted this morning on a combination of these factors. The Pound rebounded slightly from its worst levels on hopes that trade could resume soon, at least for now.
Danish Krone (DKK) Exchange Rates Mixed as Markets React to Coronavirus Developments
The Euro-pegged Danish Krone is advancing against the plummeting Pound. However, its movement is mixed overall as the latest coronavirus fears are also weighing on the Eurozone outlook.
The Eurozone’s own coronavirus situation has been worsening, as the pandemic sees new surges in major European economies. There are concerns that many Eurozone economies will spend the holiday period in restrictions.
The new coronavirus strain is also expected to hit Europe. As a result, the safe haven US Dollar (USD) is rising against the Euro, which is limiting the Danish Krone’s movement as well.
According to Yohay Elam, Analyst at FXStreet:
‘The new COVID-19 strain that has been identified in the UK is causing panic – most European countries have reacted swiftly with bans on travel to and from the UK. It is likely that the strain is circulating in Europe. Once laboratories identify it elsewhere, it could weigh on the Euro as well.’
Pound to Danish Krone (GBP/DKK) Exchange Rate Could Fall Further
The Pound outlook could continue to worsen if Britain’s coronavirus situation continues to worsen. If the new coronavirus strain keeps spreading then more parts of Britain’s economy could face lockdown.
This is on top of the already-existing no-deal Brexit threat that Britain faces.
If there is no sign of a Brexit deal in the coming days, no-deal Brexit fears could intensify as the possibility of a cliff-edge scenario at the end of the month would become closer to reality.
Brexit jitters may keep the Pound weaker than the Danish Krone, even if coronavirus fears worsen across Europe and weigh on the Euro.
Either way, the Danish Krone could be in for more weakness in the coming sessions which may make it easier for the Pound to avoid losses against it. Stronger safe haven demand could mean the Euro and Danish Krone weaken on US Dollar gains.
Tomorrow will see the publication of UK growth rate data. However, this is unlikely to have a big impact on the Pound to Danish Krone exchange rate amid fresh focus on the coronavirus pandemic.