Diving Oil Prices Weigh on NOK Demand
The Pound Sterling to Norwegian Krone exchange rate was trending within 12.4663 to 12.7236 over the past seven days.
With a lack of influential domestic data to provoke volatility, the Norwegian Krone softened versus its major peers over the past week thanks to falling oil prices. Since sanctions were lifted on Iran, allowing them to reintroduce Iranian crude to the market, oil prices have dropped below $28 a barrel. As an oil exporting nation, the falling price of oil has had a negative impact on Norway’s economy. Many analysts have predicted deeper losses for oil as the global glut swells and demand dampens. What’s more, there is a conscious effort to start shifting to renewable energy sources which will see demand for black gold reduced further.
Meanwhile the Pound has been one of the worst performing major assets over the past week thanks to mounting speculation that the Bank of England (BoE) will look to delay a benchmark rate hike for the foreseeable future. Concerns grew following the publication of minutes from the most recent BoE interest rate decision in which policymakers highlighted concerns regarding the forthcoming EU referendum as a reason to avoid altering policy. A dovish speech from Governor Mark Carney and weaker-than-anticipated UK wage growth also contributed to the dovish outlook.
GBP/NOK Dives on Thursday as Crude Ticks Higher
During Thursday’s European session the Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate softened by around -0.6%. The depreciation can be linked to crude oil prices which rose by 3% following a US government report which showed US crude stockpiles rose more than analysts expected last week, but less than an earlier industry report indicated. Positive British economic data, which saw the RICS House Price Balance advance by 50%, wasn’t enough to support demand for the Pound with BoE and EU referendum uncertainties continuing to provide significant headwinds.
UK Public Sector Finances and Retail Sales Data to Provoke GBP/NOK Volatility
With a complete absence of Norwegian economic data until Friday 29
th
to provoke changes, the Krone is likely to see volatility in response to changes in oil prices. With most analysts predicting the crude oil will fall further, there is a high chance that the Krone will continue to struggle versus its major peers.
Friday is likely to see significant GBP/NOK volatility in response to British economic data. Public Sector Net Borrowing, Public Sector Net Finances, Public Sector ex Banking Groups and Retail Sales data will all be of interest.
The Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate was trending within the range of 12.5215 to 12.6618 during Thursday’s European session.