Pound Norwegian Krone Forecast: Will Hawkish BoE Bolster GBP/NOK Exchange Rate?

GBP/NOK Exchange Rate Lifted by BoE Speculation

The Pound Norwegian Krone (GBP/NOK) exchange rate is pushing higher this morning as markets focus their attention on the Bank of England’s (BoE) latest policy plans.

At the time of writing the GBP/NOK exchange rate is up around 0.2% from its opening levels this morning.

Pound (GBP) Ticks up on BoE Speculation

The Pound appears to be on strong footing against the Norwegian Krone and the majority of its other peers this morning as Brexit concerns take a back seat and BoE rate speculation becomes the main driving force for GBP.

Markets are bracing for a possible rate hike next month as the BoE’s Monetary Policy Committee (MPC) meets for its latest policy meeting.

Analysts suggest that with a May hike largely priced in however, the focus is likely to be on the bank’s forward guidance, with any hawkish statements next month likely to prompt the Pound to soar.

Jane Foley, a currency strategist at Rabobank said:

‘After the expected move from 0.5% to 0.75% this spring, the market is not fully priced for a hike to 1.00% until May 2019.

This suggests that for GBP, the most interesting part of next month’s policy meeting may not be the rate decision but the guidance referring to the risk of another rate rise later in the year.’

However the GBP/NOK exchange rate could just as easily tumble if the MPC appears reluctant to commit to further monetary tightening this year.

Norwegian Krone (NOK) Loses Ground as Oil Slips Back

At the same time the Norwegian Krone is trading a little lower this morning as cooling tensions in the Middle East have prompted oil prices to slide.

This came as Trump appeared to walk back from some of his recent threats regarding possible missile strikes against Syria in retaliation to an alleged chemical weapons attack by the Assad government earlier in the week.

Brent crude prices are currently at $72.48 a barrel, down from a three-year high of $73.09 a barrel that was briefly struck on Wednesday.

With crude accounting for over 25% of Norway’s exports, oil prices can have a major impact on the country’s economy, and consequently the NOK exchange rate.

GBP/NOK Exchange Rate Forecast: Will UK Employment Figures Dent Rate Rise Likelihood?

Looking ahead to next week’s session the GBP/NOK exchange rate may struggle with the release of the UK’s latest labour statistics.

Economists forecast that Tuesday’s data will reveal unemployment ticked up to 4.4% in February, while wage growth is expected to have tumbled back down from 2.8% to 2.6%.

The data is unlikely to inspire confidence in the UK economy and may dent the chances of the BoE pursuing a more aggressive path of monetary tightening this year, likely leaving the Pound weakened.

Meanwhile the Norwegian Krone may strengthen at the start of next week with the release of Norway’s latest trade figures, with forecasts suggesting that the country’s trade surplus will have expanded again last month.

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