The Pound has dropped by -0.4% against the Norwegian Krone as GBP began to give up the gains recorded following the news that UK inflation had risen from 1.8% to 2.3% in February.
Krone movement recently has largely been dictated by the price of Brent crude oil, which has continued tumbling since the start of March.
Rising UK Inflation Triggered Strong Pound Gains
The main UK economic news this week has been that annual inflation in February has risen from 1.8% to 2.3%. This exceeds the Bank of England (BoE) forecast of 2.3% and led some to estimate that the BoE will now raise UK interest rates in 2018 instead of 2019.
The news pushed the Pound up strongly against the Norwegian Krone, but Sterling has since dropped due to widespread profit-taking.
Additional water has been thrown on the fire by the fact that UK wages are currently being squeezed, which makes the BoE highly unlikely to consider touching interest rates for the foreseeable future.
Norwegian Unemployment Drop Fails to Undo Damage from Oil Price Slide
The Krone’s latest rise against the Pound comes in the wake of news that Norwegian unemployment has dropped from 4.4% to 4.2%, against forecasts of a rise to 4.5%.
While a positive development, the general pattern of NOK movement this week has been for losses due to plunging Brent crude oil prices.
Since March 7
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, the cost of Brent has dropped from around $56 per barrel to the latest low of $50.43 – coupled with the threat of further losses – has weighed on the Krone.
Future GBP/NOK Exchange Rate Forecast
For the rest of this week and the week to come, Pound/Norwegian Krone exchange rate movement may occur as a result of UK retail sales figures on Thursday, the Article 50 trigger and a UK confidence score on March 29
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and Q4 GDP growth stats on March 31
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.
To cover this week’s remaining news first, the Pound may rally on the retail sales data given that increases are forecast in all fields.
However, the Pound could crash when Article 50 is officially activated, as it will mark the beginning of the lengthy Brexit process.
Additional Pound losses could be caused by falling consumer confidence on Wednesday, along with a predicted annual downgrade in GDP growth on Friday.
Norwegian data releases in the future are comparatively more limited, with retail sales stats due on March 30
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and an unemployment measure expected on March 31
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.
As with this week, the price of Brent crude oil will remain an influential factor on the Krone next week.