The Pound to Norwegian Krone exchange rate trended below the week’s opening levels on Wednesday. While Brexit hopes increased GBP demand, NOK was also bolstered by strong Norwegian data. GBP/NOK trended at around 10.40.
Pound (GBP) Bolstered by Hopes of Protecting EU Workers in UK
Sterling was sold off earlier in the week as March approached and Brexit jitters worsened, with the reality sinking in that Article 50 will be activated and Brexit proper will begin in under a month.
However, on Wednesday investors hoping for more certainty on the future got a new ray of hope. The UK House of Lords looks to support an amendment from the opposition Labour party calling for the UK government to protect EU residents living in the UK during and after the Brexit process.
With the backing of a Conservative lord, as well as Liberal Democrat and crossbencher lords, the amendment may have the support it needs to pass and push the Article 50 debate back into the House of Commons.
Not only could this protect the rights of EU workers from being ousted from Britain following a Brexit, it could also cause the activation of Article 50 itself to be delayed by at least a week.
As a result of the latest Brexit hopes, investors largely brushed over Wednesday’s news that UK manufacturing had unexpectedly slowed in February. However, the figure did increase concerns that the rest of this week’s UK PMIs would disappoint.
Norwegian Krone (NOK) Supported by Local Stats
The Norwegian Krone was able to keep the Pound at bay on Wednesday despite mixed news from commodity trade.
This was largely because this week’s Norwegian data has been solid, indicating better-than-expected growth in Norway at the start of 2017.
Tuesday’s January loan growth report improved from 4.9% to 5.1% year-on-year, and Wednesday’s Norwegian data indicated that Norway’s trade and manufacturing sectors were also outdoing expectations.
Norway’s Q4 current account figures improved from NOK24.9b to NOK59.3b. Meanwhile, the nation’s February manufacturing PMI from NIMA unexpectedly improved from 5.17 to 52.6, beating the projected 51.6.
Prices of oil, Norway’s most lucrative commodity, have fluctuated this week as US oil output increases but investors remain optimistic about increased compliance with OPEC member production cuts.
GBP/NOK Forecast: UK PMIs in Focus Towards End of Week
The Pound is likely to take point in Pound to Norwegian Krone exchange rate movement towards the end of the week as this week’s most influential UK ecostats begin to come in.
As Wednesday’s UK manufacturing PMI came in worse than projected, investors will hope that construction and services PMIs due on Thursday and Friday respectively won’t see similar drops in activity.
If UK services figures on Friday fail to meet expectations, the Pound is likely to slump, which could lead GBP/NOK to sustain losses this week.
The rest of the week also sees the publication of various influential ecostats from Norway. Thursday’s Norway retail sales figures are likely to cause the Krone to weaken if they show a decline in consumer spending. Investors will also keep an eye out for Friday’s February unemployed persons figures.
A more solid trend in oil prices could influence NOK direction too. Recent fluctuations in oil prices have left traders uncertain about the direction the commodity will take in the short-term.