The Norwegian Krone to Pound Sterling (NOK/GBP) exchange rate began the week trading in the region of 0.0863. However, a sharp drop in the price of crude oil (Norway’s main commodity) quickly saw the pairing give up gains and the Krone weakened to 0.0839 before continuing a steady declination.
The price of oil gained last week amid concerns that the conflict between Yemen and Saudi Arabia could disrupt supply. But with tensions easing and details of an Iranian nuclear deal emerging, the glut of oil soon saw prices resume their slide.
On Monday Brent crude tumbled by 12 cents, or 0.2%, to hit 56.29 Dollars a barrel. Talks between Iran and six other nations over a potential relaxation of the sanctions imposed on Iran could result in higher levels of oil exports from the nation, a development which would exacerbate the current oil excess.
The drop in oil prices swiftly undermined demand for commodity-driven assets like the Norwegian Krone and Canadian Dollar.
The downtrend in the NOK/GBP currency pair was exacerbated by the UK publishing some better-than-forecast ecostats, including positively revised fourth quarter growth data and a 12-year high consumer confidence reading.
As the pace of UK expansion was stronger-than-expected at the close of last year, the Pound rallied against a number of its peers.
Although the Norwegian Krone clawed back some of its recent losses against the Pound on Wednesday as the Office for National Statistics (ONS) asserted that the level of UK productivity remains below pre-crisis levels, gains were limited as the UK Markit Manufacturing PMI advanced from a negatively adjusted 54.0 to 54.4.
The NIMA Manufacturing PMI lent the Krone little support.
Norway’s manufacturing gauge fell from a revised 50.9 to 48.8 – moving below the 50 mark separating growth from contraction. Economists had anticipated a reading of 51.2.
Next week the bulk of Norway’s economic data is scheduled for publication on Friday.
Notable Norwegian Krone movement could occur following the release of industrial production, inflation, manufacturing production and producer price data.
Of course, any movement in oil prices will also have an impact on the Krone.
As the European session progressed on Wednesday the Norwegian Krone to Pound Sterling exchange rate was trading in the region of 0.0834.