The Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate climbed in Monday’s European session after oil prices failed to offer the latter currency any support.
The price of crude took a tumble at the end of last week following a meeting of the Organisation of Petroleum Exporting Countries (OPEC) and consolidated losses after Chinese data noted a decline in oil imports. Investors were concerned the OPEC would increase output, despite a global glut of black gold and a near 50% depreciation of prices in the past 12 months.
Additionally, oil prices could fluctuate in the near future as investors await the 30th June deadline in place for a nuclear deal with Iran. If the deal results in a lifting of Western sanctions, Iran would be able to add more oil to the global market.
Nomura International political analyst Alastair Newton commented: ‘Despite the efforts of various politicians in Washington, and various governments in the Middle East to derail this process, my very firm view is that we’re probably going to have the nuclear deal with Iran on or around the 30th June. I would put a 70% probability on that.’ If the deal goes through Ian would be able to sell an additional 0.5M barrels of crude oil every day and could pressure the price significantly lower.
Last week saw Norway’s Industrial Production ecostat contract by -3.4% on the year in April after the previous +2.3% reading. Economists had forecast a much smaller fall to 1.7%. Meanwhile, Manufacturing Production also slipped on the year, dropping from March’s 4.1% to only 0.2% in April. Again, economists had been more upbeat and forecast a softer landing to 2.6%.
The week ahead could be another influential one for the Norwegian Krone exchange rate with the release of Norway’s Producer Price Index and Inflation Rate figures on Wednesday. Inflation is expected to slip slightly lower on the year, from 2.0% to 1.9%. Meanwhile, the Pound may be influenced by UK Industrial Production, Manufacturing Production and the NIESR Gross Domestic Product (GDP) Estimate on Wednesday which are all expected to cause moderate movement.
An extremely influential event fast approaching for the Norwegian Krone is the Norges Bank’s interest rate decision, scheduled for the 18th of June. The last central bank announcement saw rates remain stable after a 25 basis point cut in December to 1.25%.
The Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate is trending in the region of 12.1200.