‘Brexit Bill’ Speculation Sends GBP/NOK Exchange Rate Lower

Fresh fears about the UK’s ‘Brexit bill’ have left the Pound to Norwegian Krone (GBP/NOK) exchange rate weaker, and greater GBP losses could be on the horizon.

In a recent statement, European Commission President Jean-Claude Juncker has warned that the UK must commit to pay a Brexit ‘divorce bill’ before negotiations can progress.

Giving an ultimatum with regard to next week’s EU summit on Brexit, Juncker said; ‘We cannot find a real compromise as far as the remaining financial commitments of the UK are concerned. As we are [unable] to do this we will not be able to say in the European Council in October that we can move to the second phase of negotiations’.

Norwegian Krone (NOK) Exchange Rates Rise on Higher Oil Prices

After being supported by a recovery in Norwegian inflation earlier in the week, NOK exchange rates were lifted by rising oil prices before the weekend.

While the Norwegian inflation data for September did not show as much growth as forecast, the month-on-month figures still showed a shift from a negative range to a positive one.

Meanwhile, brent crude oil prices have risen to around $57.42 per barrel recently, which has been partly attributed to OPEC plans to cut oil production in the future.

UK Wage Stats Could See Pound Extend Losses Vs Norwegian Krone

The Pound could extend losses against the Norwegian Krone next week if UK data disappoints.

The main focus will be on UK inflation data on Tuesday, followed by jobs data on Wednesday.

Forecasts have been for mixed across the board – with inflation, economists predict higher annual readings but a month-on-month slowdown in October.

Inflation hitting 3% in October would put it 1% above the Bank of England (BoE) target of 2%, but wouldn’t guarantee a near-term interest rate hike.

Problematically, UK average earnings without bonuses are tipped to slow on Wednesday, which would only worsen UK wage squeeze conditions.

Jobless claims are also forecast to rise, which could leave the Bank of England (BoE) in a very difficult position.

BoE Rate Hike Speculation to Drive Long-Term GBP Exchange Rates

If the BoE raises UK interest rates to combat higher inflation, it will put households under further financial pressures and could inhibit consumer spending.

Next week’s other UK news will include retail sales figures on Thursday, along with borrowing data on Friday.

In another possible upset, sales are forecast to have slowed in September and the borrowing deficit is tipped to expand.

As these reports are liable to impact the likelihood of the Bank of England (BoE) increasing interest rates in November, we can expect notable Pound movement.

There isn’t as much Norwegian data on the calendar next week, but confidence and trade figures could have a modest impact on NOK exchange rates.

Luke Trevail

Luke studied Journalism at university but quickly moved into the financial sector, initially working in retail banking before joining TorFX in 2007. As a Senior Account Manager Luke assists in overseeing the management of the company’s exposure to currency volatility. He uses his years of foreign exchange experience to produce regular news updates exploring the latest currency movements.

Contact Luke Trevail