Gloomy UK Growth Forecasts Trigger Pound to Norwegian Krone Exchange Rate Decline
The Pound to Norwegian Krone exchange rate (GBP/NOK) has fallen to a four-month low today over fears about low UK economic confidence and a sudden Krone rally.
In the former case, Sterling has been devalued due to the Organisation for Economic Co-operation and Development’s (OECD) worrying forecast for future UK growth.
The OECD predicts that the UK economy will see a minor bump in growth during 2018, but that this will pale in comparison to the growth of other developed nations.
The organisation has also predicted that UK growth rates will slow to 1.1% in 2019, due to the country entering the Brexit transition period.
Further GBP/NOK Losses Triggered by IFS Tax Warning
Another factor keeping the Pound down against the Norwegian Krone today has been the concern that UK taxes might have to be hiked in a bid to reach a balanced budget by 2025.
The Institute for Fiscal Studies (IFS) has predicted that if the current government’s budget target is to be reached, raising taxes by around £30bn each year may be necessary.
This stinging assessment flies in the face of Chancellor Philip Hammond’s optimistic outlook when delivering the Spring Statement and has contributed to the Pound’s devaluation.
Norwegian Krone to Pound (NOK/GBP) Exchange Rate Rises Sharply after Hawkish Norges Bank Forecast
The Norwegian Krone has made a notable advance against the Pound today, following the Norges Bank monetary policy meeting for March.
The Norwegian central bank left interest rates at 0.5% as expected, but traders have concluded that there could be an interest rate hike after the summer.
Norges Bank’s interest rate has remained flat at 0.5% since early 2016, so even this vague indication of an incoming rate hike has boosted NOK trader confidence.
Pound to Norwegian Krone Forecast: GBP/NOK Exchange Rate Turbulence Risk from UK Inflation and Jobs Data
After an empty week for UK economic data, the Pound to Norwegian Krone exchange rate could recover next week.
High-impact UK economic announcements will include the inflation rate readings for February on Tuesday, along with unemployment and earnings data on Wednesday.
UK inflation rates are tipped to have slowed, while a drop in the unemployment rate has also been predicted.
Such results could cause a midweek GBP/NOK exchange rate rise as lower inflation would increase the chances of earnings catching up to the rate of price growth.
UK wage growth stats on Wednesday aren’t expected to show a major shift, but this outcome is not set in stone.
The week’s last Pound-influencing event will be the Bank of England’s (BoE) interest rate decision on Thursday, with policymakers also expected to hint at future monetary policy.
If BoE officials take the Spring Statement’s optimistic outlook to heart and predict better economic conditions over 2018, the Pound to Krone exchange rate could pick up.
On the other side of the pairing, the Norwegian Krone could be affected by the unemployment rate reading for January out early on Wednesday.
If the jobless rate drops from 4.1% to 4% as expected then the Norwegian Krone could firm against the Pound, although Sterling could later bounce back if UK unemployment falls and wages rise.