The Pound (GBP) has plummeted against the Norwegian Krone (NOK) this week following the announcement of an official timetable for ‘Brexit’ from UK Prime Minister Theresa May over the weekend, which caused a sharp downturn in the value of Sterling.
Pound Slides on ‘Brexit’ Woes
Markets reacted violently to the announcement that Theresa May had committed to invoke Article 50 of the Lisbon Treaty before the end of March 2017, fleeing the Pound with reckless abandon.
By invoking Article 50 the PM will be triggering two years of formal negotiations for the UK’s leaving of the European Union. Most traders harbour concerns about these negotiations as the UK government is perceived to be pursuing a ‘hard Brexit’ in which the UK will forgo access to the EU’s single market in favour of stronger controls on immigration.
The Pound has also been hit by the strengthening US Dollar (USD) due to increasing bets that the US Federal Reserve will hike interest rates in December.
Krone Gains on Healthy Domestic Data
The Norwegian Krone rose on Monday thanks to strong Manufacturing PMI data that saw an increase to 52.6, outperforming forecasts of 51.2. This is the fifth consecutive month of growth and has helped to bolster NOK.
The surge in oil prices following last week’s reports that OPEC appeared to be close to signing a deal to help curb global oil production, also gave the Krone a healthy boost.
However the deal will not be officially signed until November’s meeting, and OPEC has a history deals falling through at the last minute. The agreement is also missing one of the world’s major oil producers, Russia, which is actually aiming to increase oil output in the coming months.
GBP NOK Forecast: Norwegian Krone Likely to Rise Further
The Pound is likely to slide further as ongoing fears over ‘Brexit’ could overshadow any domestic data that comes out of the UK in the near future, with Monday’s positive Manufacturing PMI Data only causing a slight blip in market sentiment.
The GBP NOK exchange rate is likely to see some fluctuations however, as traders buy Sterling to profit on the Pound’s lows.
With oil playing such a major part in the Norwegian economy, should the OPEC deal fall through it is highly likely that NOK’s uptrend will slow.