The past week has seen the Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate climb from a low of 12.6633 to a high of 12.9299, after the declining price of crude oil drove the Pound up against the Norwegian Krone.
Last week, the Pound experienced mixed blessings when it came to data releases; the first major release on Tuesday was the Q2 UK GDP data. The quarterly result saw an increase from 0.4% up to the forecast 0.7%, but the yearly figure fell from 2.9% down to the predicted 2.6%. Although indicative of solid growth, the annual figure still meant a (slight) slowdown for the UK economy. David Kern, Chief Economist at the British Chambers of Commerce, said ‘It is good that our economy continues to grow, but there are many hurdles to clear in the months ahead. This is not the time for complacency’.
One of those hurdles was reached on Wednesday, when the UK Net Consumer Credit and Mortgage Approvals figures for June were announced; however, both results proved favourable for the Pound, recording a £1.2bn and £66.6k increase respectively. The news saw the Sterling spike against the Norwegian Krone, coming at 12.7696 Krone per Pound.
The Pound to Norwegian Krone exchange rate dived again on Friday after two factors combined to lower the value of the Pound. The first was the UK GFK Consumer Confidence Survey for July, which fell from 7 points to 4, a worse result than the predicted drop to 5 points. The second event was crude oil prices peaking above ¢48.00, which increased the value of the Krone and sent the Pound down to its weekly low of 12.6633.
The GBP/NOK pairing surged this Monday, when did the price of crude oil not only troughed to under ¢45.50, but the US Dollar gained in strength after positive US yearly Personal Consumption Expenditure Core data for June showed an increase of 1.3%. This spelt good news for the Pound, seeing it gain against the Krone to the rate of 12.8312.
Tuesday saw a slight dip in the Pound’s performance against the Krone; the UK Construction PMI came in at 57.1, -1.4 points lower than the forecast figure of 58.5. This saw a lowering of the exchange rate to 12.7910 Krone per Pound, although this figure still remained higher than any previous peaks in the past week.
For the current and following week, Pound Sterling exchange rate movement may occur as a result of the Bank of England’s (BoE) Monetary Policy Committee (MPC) Meeting on ‘Super’ Thursday, the US Change in Non-Farm Payrolls data for July (released on Friday) and the continuing fluctuations in the price of crude oil.
While the MPC is unlikely to increase the UK interest rate immediately, any hints that an increase is coming will strengthen the Pound against the Krone considerably. Furthermore, a positive result in the US data will trigger speculation that the Federal Reserve will increase US interest rate as early as September; this will strengthen the US Dollar and conversely lower the Krone’s value, thereby increasing any advantage held in the GBP/NOK exchange rate.