Signs of Stagnation in Brexit Talks Brings GBP/NOK Exchange Rate Losses
The Pound has fallen sharply against the Norwegian Krone today, dropping by -0.6% to an interbank exchange rate of 10.77.
This decline in Pound Sterling demand follows the news that EU chief negotiator Michel Barnier isn’t planning to budge during Brexit negotiations.
Speaking alongside new Brexit Secretary Dominic Raab, Mr Barnier was asked whether the EU was willing to compromise its principles in order to secure a Brexit agreement.
In a statement that has panicked GBP traders, Mr Barnier responded:
‘Why would we? How can you change principles on which the European Union is based? Why would you? The UK is leaving the European Union, it’s not the other way round.’
Norwegian Krone to Pound (NOK/GBP) Exchange Rate Rises as Oil Fund Reports Inflows
The Norwegian Krone’s (NOK) significant rise against the Pound (GBP) today has also been caused by news about the national sovereign wealth fund, which manages profits from oil-producing activities.
The fund has seen the first inflow of capital in three years during June 2018, which is attributed to recovering oil prices.
Oil extraction and exporting is a key component of Norwegian economic growth, so signs that the industry is bringing in revenue have raised NOK trader confidence.
GBP/NOK Exchange Rate Forecast: Will No-Deal Brexit Plans Cause Further GBP/NOK Losses?
The Pound’s (GBP) recent drop against the Norwegian Krone (NOK) could be followed by greater losses on Thursday this week, when government Brexit plans are due out.
These will reveal the government’s contingency measures in the event of a no-deal Brexit and might trigger additional GBP/NOK exchange rate losses.
If Pound Sterling traders worry about the fact that a no-deal Brexit is considered a possibility, demand for the UK currency could fall further.
Are Norwegian Krone to Pound Exchange Rate Gains ahead on GDP Data?
Norwegian Krone traders may have a better run of trading for the rest of the week, with high-impact GDP and unemployment rate data due out on Thursday and Friday.
In the former case, Thursday’s Norwegian GDP growth figures are predicted to show a sizable year-on-year rise for the Q2 2018 reading, with a shift from 0.3% to 1.1%.
The quarter-on-quarter figures aren’t expected to print so well, but as annual figures are often considered more high-impact, the Krone could still rise against the Pound.
Closing off weekly economic news, Friday’s Norwegian unemployment rate reading is tipped to remain at 3.8% but could push the Krone higher if it shows a surprise drop.