The Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate rallied by nearly 2% on Monday afternoon.
In response to the Conservative victory in the general election, the Pound advanced across the board. This is despite the fact that the Tories offered a referendum on European Union membership as part of their electoral campaign. The Conservatives are generally seen as better at handling economic recovery, with their policies well received by businesses and banks.
Monday saw the Pound continue to strengthen versus all of its most traded currency competitors. This was in spite of the Bank of England (BoE) meeting with economists’ predictions by keeping the benchmark interest rate on hold at 0.5%. Wednesday’s BoE Inflation Report will be of interest to those invested in the Pound as the institution is likely to outline proposals for monetary policy outlook under a Tory government.
‘The fear is that fiscal austerity could lead to a sustained growth underperformance which will delay and temper the extent of BOE tightening,’ said industry expert Valentin Marinov. ‘My hunch is that the BOE will maintain a fairly constructive view on the UK’s longer-term inflation and growth outlook. The Pound could extend its gains in the wake of the Inflation Report.’
The Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate is currently trending in the region of 11.7721.
The Norwegian Krone softened versus many of its major peers on Monday despite relatively positive inflation data. April’s domestic Inflation Rate met with the median market forecast of 2.0% on the year. On the month, however, April’s Inflation Rate gained from 0.4% to 0.5%. Senior Analyst Morten Helt at Danske Bank stated; ‘The weaker Krone has kept inflation around 2-2.5% for the past two years but it will probably come down as capacity utilisation falls and wage growth slows. In the short term, though, the slide in the Krone last autumn will be pushing up prices for imported consumer goods, leading to slightly higher core inflation.’
The Krone declination can be attributed to oil prices trading flatly. The recent rise in crude prices has fuelled speculation that some US producers may restart which has caused prices to remain static. Additional downward pressure on oil prices can be attributed to OPEC stating that oil could trade below $100 a barrel for the next decade. ‘$100 is not in any of the scenarios,’ said a delegate at the OPEC strategy presentation last week in Vienna.
The Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate was trending within the range of 11.5437 – 11.7882.