Optimism about UK Government Bolsters GBP/NOK Exchange Rate
The Pound Norwegian Krone (GBP/NOK) exchange rate is surging this morning, with analysts attributing the rise to renewed confidence in the UK government.
At the time of writing GBP/NOK is up by 0.4%, which has helped the pairing to reclaim some of the losses suffered earlier in the week.
Pound (GBP) Strengthens as Doubts over PM’s Position Subside
The Pound got off to a strong start this morning, rising against the Norwegian Krone as well as a number of its other peers.
Observers have attributed the rally in Sterling to renewed confidence in the UK government, with suggestions that Theresa May’s position within her party is beginning to look a little more stable.
Sterling exchange rates have come under considerable pressure in recent weeks as May has been dogged by reports of a split at the top of the Tory party, causing rumours of a possible leadership challenge to circulate.
However recent polling data, which suggests that the Conservatives have regained their lead over Labour, appears to have quelled some of the criticism of the PM.
Adam Cole, Head of FX strategy at RBC Capital Markets said:
‘We note that prediction markets now have Labour and the Conservatives neck-and-neck as likely to be the largest party after the next election.
‘The probability of this government serving its full five years has also risen to a new high, though the risk of an earlier election is still high. Both of these developments have probably offered some support to GBP.’
With threats against the PM appearing to have subsided, it is hoped that the government will be able to offer a more unified front in Brexit negotiations.
Norwegian Krone (NOK) Slides despite Rise in Trade Surplus
Meanwhile the publication of Norway’s latest trade balance figures appear to have done little to limit the Norwegian Krone’s losses this morning.
Preliminary figures published by Statistics Norway showed that the country’s trade surplus swelled from NOK24.7bn to NOK28.8bn in January, beating expectations of a more modest rise to NOK 26.6bn.
The uptick was largely on the back of stronger oil prices as Brent crude rose to over $71 a barrel last month to a three-year high.
However, with oil prices having fallen back again this month economists forecast that the jump in the trade surplus is likely to be temporary.
GBP/NOK Exchange Rate Forecast: Rebound in Retail Sales to Bolster Sterling?
Looking ahead the GBP/NOK exchange rate may continue to rocket higher on Friday as the UK publishes its latest retail sales figures.
Economists expect tomorrow’s data will show sales growth rebounded from a one-year low of -1.5% to 0.5% in January.
Meanwhile with little in the way of domestic data due until next Wednesday’s unemployment figures, the Norwegian Krone is likely to find its momentum tied closely to movement in oil markets.