The Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate has declined progressively this week, with the initial high of 12.4598 seen on Monday giving way to today’s low of 12.3082.
Shortage of UK Data This Week Proved to be Pound’s Worst Enemy
Movement in the GBP/NOK exchange rate has been driven by negative UK data and a risk-off trading environment this week.
Monday’s movement was largely a hangover from Thursday’s dovish Bank of England (BoE) Interest Rate Decision, which saw every Monetary Policy Committee (MPC) member including longtime hawk Ian McCafferty vote against a UK interest rate hike. The announcement was disastrous and saw Sterling crash across the board, with the Pound failing to break out of its downtrend as a new week of trading began.
UK data was slightly more positive on Tuesday when, in addition to the BRC like-for-like sales figure for January coming out positively, the UK’s trade deficit also narrowed by more-than-expected in December. To cap it all off, Goldman Sachs estimated that there was a microscopic chance of a UK recession occurring in the foreseeable future. However, Pound gains were limited as the UK’s deficit for 2015 as a whole was shown to be at historic levels.
Yesterday was another dip on the GBP rollercoaster, as the Pound crashed once again when the news came in that Financial Policy Committee official Adair Turner stated that the UK interest rate was unlikely to move beyond 2% by 2020. Added to this were the misery-inducing sliding industrial and manufacturing results for December, which fell across the board.
Sterling’s Slide Continues
For the most part today, the Pound has fared extremely poorly against the competition. In addition to the apparently global crash in market prices today, two UK-specific developments have also occurred to lower investor enthusiasm.
The first has been the slashing of the UK’s growth forecast for 2016 and 2017 by the Confederation of British Industry (CBI), which cited poor domestic data and global uncertainty as its justification. Additionally, a committee of MPs has been grilling high-ranking Google member Matt Britten and HMRC head Lin Homer about Google’s apparent tax avoidance strategies.
Norwegian Krone Rocked by Sporadic Oil Prices, Buoyed by Rising Inflation
The movement of the Krone this week has been largely directed by the price of oil. The cost of Brent dived from around $34.50 per barrel to a low of under $30.50, although it has since crept back up to $31.02, lending the Krone some stability.
The domestic stats were largely positive; Norwegian inflation was shown to have risen in January from 2.3% to 3% on the year, while on the month it jumped from -0.4% to 0.6%.
GBP/NOK Exchange Rate Forecast
For the remainder of this week and the next, Pound Sterling/Norwegian Krone exchange rate movement may occur as a result of tomorrow’s UK Construction Output results for December as well as Monday’s Norwegian Balance of Trade stats for January and the UK February Rightmove House Price data.
Keep up to date w
i
th the latest from TorFX at:
facebook.com/torfx