Pound to Norwegian Krone Exchange Rate Recovers from Lows on Thursday Data
Despite new deadlock in UK-EU Brexit negotiations causing the Pound to Norwegian Krone (GBP/NOK) exchange rate to plummet on Wednesday, the pair recovered from its weekly lows on Thursday morning.
After opening this week at the interbank level of 10.96, GBP/NOK has spent most of the week trending lower. On Wednesday the pair plunged to a low of 10.85 – its worst level in over three weeks.
The pair began to advance from its lows on Thursday, thanks to the latest UK and Norway data.
Sterling’s (GBP) recovery against the Norwegian Krone (NOK) was easier as investors have had little reason to buy the Krone, with Norwegian data disappointing in recent sessions.
Thursday saw the publication of Norway’s February manufacturing PMI from NIMA, which slipped to 57.5. Disappointingly, the previous figure was revised lower too – from 59.0 to 58.4.
It followed Wednesday’s Norwegian retail sales results from January, which also disappointed. Retail sales were forecast to come in at 0.3% month-on-month but instead contracted by -0.4%. The previous figure was revised lower from -1.0% to -1.1%.
The year-on-year retail sales figure slowed from 4.2% to 2.1%.
Due to the disappointing data from Norway, even a weakened Pound was able to recover against the Norwegian Krone.
Pound (GBP) Exchange Rate versus Norwegian Krone (NOK) Supported by UK Data
The Pound to Norwegian Krone (GBP/NOK) exchange rate’s slight recovery on Thursday was supported by decent fresh UK data, despite market concerns about the possibility of a ‘hard Brexit’.
Thursday saw the publication of Britain’s February manufacturing PMI from Markit, which beat forecasts of 55.0 and instead only slipped slightly from 55.3 to 55.2.
While this was still the lowest factory growth in eight months, it was still better than expected and indicated that Britain’s economy still had strong points despite Brexit uncertainty. Markit’s report showed new orders and hiring picking up in February.
The Bank of England’s (BoE) January consumer credit report figure came in slightly lower than expected, at £1.357bn rather than the forecast £1.4bn. This represents a slip from the previous figure of £1.58b.
Higher-than-expected mortgage approvals of 67.48k in January also supported Sterling slightly despite Brexit concerns.
On Wednesday, UK Prime Minister Theresa May rejected an EU draft proposal on the Irish border, with EU chief negotiator Michel Barnier stating a post-Brexit UK-EU transition period was still not a done deal.
These perceived complications in negotiations caused GBP/NOK to plummet and worsened fears that Brexit negotiations could still end in a ‘hard Brexit’.
Pound to Norwegian Krone Forecast: Reassuring Brexit Speech Could Boost GBP/NOK Recovery
While data helped the Pound to Norwegian Krone (GBP/NOK) exchange rate to advance slightly on Thursday, the pair’s gains were still limited by persistent Brexit uncertainties.
As a result, investors are more focused on Brexit developments than data, with markets highly anticipating Friday’s Brexit speech from UK Prime Minister Theresa May.
Traders expect Theresa May will clarify the UK’s Brexit position. She is also being urged to clear up the government’s stance on the Irish border issue, as well as potentially indicate that she will work on solutions to the issue with EU negotiators.
If May is able to impress critics and markets and offer more clarity on how the UK government will handle Brexit negotiations going forward, the Pound could extend its recovery against the Norwegian Krone.
With investors focused on Brexit news, Friday’s ecostats are unlikely to have a major impact on GBP/NOK.
UK construction PMI data from Markit will be published at the same time, as well as Norway’s unemployment figures from February.
In terms of data at least, next week’s UK services PMI and Norway inflation results are likely to be much more influential.