Pound Sterling Norwegian Krone (GBP/NOK) Exchange Rate Recovers Ground Despite Retail Sale Surge
Investors failed to take particular encouragement from the news that consumer spending had risen 3.7%, with the Norwegian Krone (NOK) lacking much upside potential at this juncture.
As the more optimistic message that emerged from the Norges Banks’ December policy meeting had previously driven the Krone sharply higher this helped to keep a floor under the GBP/NOK exchange rate.
Even with Brent crude prices continuing to trend firmly above the $60 per barrel, with the oil market remaining in a generally bearish mood, this failed to encourage further NOK exchange rate gains on Thursday.
Weaker UK Mortgage Approvals Fail to Dent GBP/NOK Exchange Rate Uptrend Today
The GBP/NOK exchange rate also largely shrugged off the negative implications of the latest BBA mortgage approvals data, in spite of the figure proving weaker than anticipated.
While approvals slipped from 41,702 to 39,507, hitting a 15-month low, this was not enough to particularly weigh down the Pound Sterling (GBP).
Even so, this weaker showing does not bode overly well for the domestic outlook, offering another sign that domestic confidence is diminishing.
With trading volumes thin ahead of the New Year the downside bias of the Pound has eased somewhat, especially as markets lack any fresh Brexit-based news or developments.
However, while this has allowed the GBP/NOK exchange rate to recover some ground the pairing remains distinctly vulnerable to any major shifts in market sentiment in the short term.
Pound Sterling Norwegian Krone (GBP/NOK) Exchange Rate Forecast: Norwegian Unemployment and Manufacturing Data in Focus
The GBP/NOK exchange rate could face a weaker start to 2018, though, with the release of the latest Norwegian manufacturing PMI and unemployment data.
Although forecasts point towards a steady reading from the unemployment rate, the Krone could find a fresh rallying point on the back of a robust manufacturing PMI.
A strong showing from either result would give the Norges Bank further encouragement to return to a monetary tightening bias, boosting the appeal of the Krone as a result.
If market expectations increasingly favour an interest rate hike in the coming months then the GBP/NOK exchange rate may struggle to find any real traction.
On the other hand, if the unemployment rate rises on the month this could discourage policymakers from taking any imminent action and send NOK exchange rates on a fresh downtrend.
Norwegian Krone Exchange Rates Fragile as Further Volatility Forecast for Oil Market
Brexit will also remain a key influence on the GBP/NOK exchange rate throughout 2018, as investors continue to look for clarity over the shape of the UK’s future trading relationship with the EU.
Unless markets continue to see signs of positive progress towards a transitional deal and good-natured trade agreement the Pound will continue to look relatively vulnerable.
However, any negative developments in the oil market are likely to benefit the GBP/NOK exchange rate, as the outlook of the commodity remains rather uncertain.
With cracks already starting to show within the OPEC-led production-curbing deal the potential for a fresh surge in global supply remains, a development which could see the Norwegian Krone come under renewed pressure.