The Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate rallied by around 2.15% on Monday.
Over the past month, the Norwegian Krone has seen significant fluctuations in response to speculation regarding Norges Bank intervention. After the central bank avoided cutting the benchmark interest rate in May, the Krone rallied to a six-year high versus the US Dollar. Policymakers stated that the cash rate cut was avoided thanks to credit growth. However, fluctuating crude prices and mixed domestic data results have reignited speculation that Norges Bank will cut the lending rate in June. One such poor data result was first-quarter Gross Domestic Product, which missed estimates of 1.6% growth on the year, with the actual result only reaching 1.5%.
Over the past month, the Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate was trending between 11.1332 and 12.0693.
On the first Monday of June, the Krone dived across the board after manufacturing data missed estimates. The NIMA manufacturing PMI came in at 46.6 in May, missing the median market forecast rise from 50.5 to 51.24. The drop into contraction territory has reignited speculation that Norway’s central bank will cut the cash rate in June, a notion further exacerbated by a drop in demand for credit. ‘At the May meeting, Norges Bank mentioned credit growth as one of the arguments for not cutting rates,’ said Erlend Loedemel, chief economist at Arctic Securities in Oslo. ‘Today’s data seem to remove a barrier for a June 18 rate cut, which continues to look quite likely in our view.’
In addition to manufacturing output declining, the Krone softened in response to another poor result from domestic data on Monday. On the year, Loan Growth advanced by 5.7% in April, missing the market consensus of a rise to 5.9% and dropping from the previous figure of 5.8%.
Looking ahead, there will be several important data publications over the coming month which will be of interest to those invested in the Krone. Of most significance will be the Norges Bank interest rate decision; especially given all of the speculation surrounding a benchmark interest rate revision. In addition to the rate decision; Current Account, Industrial Production, Manufacturing Production, Producer Price Index, Inflation Rate, Balance of Trade, Unemployment Rate and Retail Sales will be of interest to those trading with the Norwegian asset. As well as domestic data releases, crude prices will also drive movement for the Krone.
On Monday, the Pound Sterling to Norwegian Krone (GBP/NOPK) exchange rate was trending in the region of 12.1145.