Over the course of the past week mixed UK news has seen the Pound/Norwegian Krone exchange rate fluctuate moderately, shifting between 10.73 and 10.91.
Demand for the Norwegian Krone has been dictated by the fluctuating price of crude oil, domestic data and an isolationist response to the European migrant crisis. Upcoming Norwegian news will focus on second quarter GDP and manufacturing in August.
Sterling Crumbles as Rising Retail Sales in August Trigger Alarm
After rallying for three days, the Pound reversed gains on Thursday and plummeted across the board.
Surprisingly, the shift actually followed the publication of positive UK data – a rising Confederation of British Industry (CBI) distributive trades result for August from -14 to 9.
Investors were mainly put off from supporting the Pound further due to comments that came along with the announcement; CBI Head of Economic Analysis Anna Leach warned that;
‘While the fall in Sterling has boosted visitor numbers to the UK, it is likely to push up the price of imported goods over time which will mean households will be more likely to rein back spending on non-essentials’.
NOK Gains Limited by Oil Price Shifts and Anti-Refugee Fence
This week the Krone has been influenced by both domestic data and commodities news, as well as a political development in response to the continuing migrant crisis.
In commodities news, the price of Brent crude oil has fallen from a high of just under $51 per barrel to around $49, while Norwegian domestic data has shown consumer confidence shift from -12.6 to -4.12 and the June unemployment rate rise from 4.7% to 4.8%.
More widely, Norway has made headlines by taking action to block refugees from entering the country from Russia by building a fence along the border. While this may well prevent refugees from entering the nation, the action reflects poorly on Norway when it comes to welcoming visitors and also could inflame tensions with Russia.
GBP/NOK Exchange Rate Forecast
In the week ahead, Pound Sterling/Norwegian Krone exchange rate movement may occur as a result of Friday’s UK GDP growth rate and speech from Bank of England (BoE) official Nemat Shafik, while for next week, a UK confidence score will come on Wednesday and a pair of PMIs are expected over Thursday and Friday.
From Norway, we can expect Q2 GDP growth rate and the NIMA manufacturing PMI for August.
Friday’s UK second estimate Q2 GDP is expected to rise on the quarter and the year, while Shafik will be speaking at the US Jackson Hole Symposium and therefore may not mention BoE policy.
The GfK consumer confidence result is forecast to shift from -12 to -7 over August, while Thursday’s manufacturing PMI is forecast to rise from 48.2 to 48.8 and Friday’s construction PMI has a worsening from 45.9 to 45.61 in store.
Norwegian GDP is forecast to rise on the year in Q2 but fall on the quarter, while the manufacturing PMI has a decline predicted.
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