Pound Danish Krone Exchange Rate Outlook Depends on Thursday's ECB Meeting

Pound to euro exchange rate
GETTY GOING DOWN The pound to euro exchange rate nosedived this morning

19 July, 2017

The dollar hit its lowest against the euro and Swiss franc in more than a year on Tuesday, with the broader dollar index touching a more than 10-month low, on reduced confidence in U.S. President Donald Trump's agenda and jitters over hawkish central banks overseas. There are some major changes in market dynamics going on at the moment and though the uptrend is clear in this pair, the traders have to wait for the right price regions to go long. EUR/GBP has advanced from 0.8754 to around 0.8850 so far this week.

As per an article published on Morningstar, "one reason to end QE soon is that the European Central Bank is expected to struggle to find enough bonds to buy later next year.... the European Central Bank to purchase only up to 33% of any Eurozone government's debt, could prove legally and politically tricky....economists also worry increasingly about a build-up of financial risk after years of ultra-low interest rates".

Analysts have argued for both possibilities. Some believe the bank will announce the end-date of its QE program during September's policy decision, while other reports suggest the ECB is hesitant to announce or hint at any end-date until it is confident the stimulus has done its work.

"A strong euro has also raised expectations that they will not sound overly hawkish", said Benjamin Schroeder, a rates strategist at ING.

Eurozone inflation met expectations in June, ZEW's July economic sentiment surveys fell short of expectations, and Eurozone construction output in May slowed from 3.3% to 2.6%.

GBP Edges Away from Weekly Lows Some investors bought the Pound from its cheapest levels on Wednesday. Lower inflation issues are being viewed as short-lived by Draghi, as per an article published on MarketWatch.

Data this week confirmed that euro zone inflation remains tame at 1.3 percent - well below the ECB's near 2 percent target - while further strength in the single currency could dampen inflation by keeping down import costs.

"Together with this, the European Central Bank could add that the duration part of QE will be reconsidered at the meeting in September, when the European Central Bank has updated inflation projections". If inflation continues to slow and wage growth improves, the pay squeeze would lighten and United Kingdom consumers would be able to spend more comfortably.

As Britain's economy is heavily consumer-facing, a boost in consumer activity would benefit Britain's Gross Domestic Product (GDP) growth.

The Pound to Danish Krone exchange rate could see significant movement by the end of the week depending on the outcome of the ECB's July policy decision.

Since ECB chief Mario Draghi's Sintra speech in June, markets have started to price in the beginning of the end of the ECB's ultra-loose monetary policy - pushing up bond yields and the euro.

As for the Pound, stronger-than-expected retail sales results would lead to hopes that Britain's economy will be resilient later in the year despite the pay squeeze. This continued during the U.S. session as well and this helped the EURUSD pair to push towards the 1.1580 region but the 1.16 round figure managed to hold on and this helped the dollar to recover a bit.

More news

  • Vauxhall unveils 257bhp Insignia GSi model

    Vauxhall unveils 257bhp Insignia GSi model

    Vauxhall has also provided the new GSI with various visual upgrades aimed at making the auto look sportier and more aggressive. The Insignia's visual revival into the current model is impressive, and could well be a great platform for the new GSi model.

    The Valero Energy Corporation (VLO) Shares Sold by Lazard Asset Management LLC

    Guardian Life Insurance Co. of America boosted its position in shares of Valero Energy Corporation by 0.6% in the first quarter. Seven equities research analysts have rated the stock with a hold rating and fourteen have issued a buy rating to the company.
    The Shape of Water Trailer: Guillermo del Toro's New Fairy Tale

    The Shape of Water Trailer: Guillermo del Toro's New Fairy Tale

    Rounding out the cast are Michael Shannon , Richard Jenkins , Michael Stuhlbarg and Doug Jones . Jones should feel right at home in The Shape of Water , as he's once again playing a fish man.
  • SoftBank, GM and BMW invest $159 million into driverless vehicle  start-up Nauto

    SoftBank, GM and BMW invest $159 million into driverless vehicle start-up Nauto

    Nauto collects information about driverless driving by using smart cameras to assess road conditions and traffic situations. Previous investors included German automaker BMWand Japanese automaker Toyota, as well as German insurance firm Allianz .
    Celtic FC to face competition for Patrick Roberts

    Celtic FC to face competition for Patrick Roberts

    Roberts has excelled at Celtic these past 18 months, but Southampton are reportedly ready to ask Manchester City about a deal for the 20-year-old.
    Man Tied to 4 Sex Attacks in Brooklyn Just Hours Apart

    Man Tied to 4 Sex Attacks in Brooklyn Just Hours Apart

    As she left the elevator when it arrived at her floor, the man put his hand over her mouth and tried to drag her to the ground. The man is seen on surveillance wearing a black shirt with a very distinctive message that uses the F word three times.
  • Dodgers trying to sell naming rights to field at Dodger Stadium

    In February, the Dodgers confirmed that they would solicit investors interested in buying a minority share of the team. Brener did not confirm the reported price for the naming rights to the field-$12 million.

    The VF Corporation (NYSE:VFC) to Release Earnings on Monday

    Finally, Susquehanna Bancshares Inc restated a "neutral" rating and set a $49.00 price target (down from $52.00) on shares of V.F. This repurchase authorization allows the textile maker to reacquire up to 22.3% of its shares through open market purchases.

    Campbell Soup Company (NYSE:CPB) Shares Dip Under Moving Averages

    Kbc Group Nv increased Apogee Enterprises Inc (NASDAQ:APOG) stake by 27,391 shares to 52,764 valued at $2.83 million in 2016Q4. The company reported $0.59 earnings per share (EPS) for the quarter, missing analysts' consensus estimates of $0.64 by $0.05.
  • 3 killed in collision between tanker, van near Grand Forks

    3 killed in collision between tanker, van near Grand Forks

    Three of the 10 occupants of the Chevrolet Express passenger van were killed in the crash , others were hospitalized. The crash shut down westbound traffic on Highway 2 for a time and traffic was detoured.

    Barclays Keeps Rating And Lowers Price Target On Boston Properties, Inc. (BXP)

    Sir Capital Management Lp decreased Dow Chem Co (NYSE:DOW) stake by 139,919 shares to 234,541 valued at $13.42 million in 2016Q4. Boston Properties, Inc is a real estate investment trust. (NYSE:BXP). 974,209 were accumulated by Nuveen Asset. (NYSE:BXP).

    Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) Reviewed By Analysts

    The business services provider reported ($0.08) EPS for the quarter, beating the Zacks' consensus estimate of ($0.15) by $0.07. On May 13 the company was changed to a "Sell" in a report from Evercore ISI Group which was a cut from the previous " rating.