GBP/NOK Exchange Rate Falls as Norwegian Industrial Production Weakens
The GBP/NOK exchange rate is down today and is currently trading within the region of 11.3974kr.
The Norwegian Krone gained on the Pound today despite weak manufacturing output figures for January, which fell below the consensus of 0.5% to a disappointing -0.2%.
These were also followed by weaker-than-expected Norwegian industrial production figures for January, which fell considerably by -2.2% against December’s 0.7%.
Many Norwegian Krone traders are feeling skittish as the Norwegian economy is particularly export-driven. The OECD also recently cut the 2019 world growth outlook from 3.5% to 3.3%, leaving many NOK traders feeling jittery over signs of decreasing demand due to a weakening global economy.
The Pound, meanwhile, has continued to weaken despite the printing of the UK Halifax house prices figures for February increasing above the consensus of 0.1% by an impressive 5.9% today.
Russel Galley, a managing director at Halifax, remained subdued, however, saying:
‘[These results are] fairly subdued compared to 2015 and 2016, when the average growth rate was 8.3 per cent… People are still facing challenges in raising a deposit which means we continue to expect subdued price growth for the time being.’
GBP/NOK Exchange Rate Drops as Pound Traders Brace for Irish Backstop Talks
Many Pound investors are anxious over on-going EU-UK discussions in which the Attorney General, Geoffrey Cox, together with the EU’s Brexit Negotiator, Michel Barnier, are attempting to renegotiate the Irish backstop ahead of the 12 March ‘meaningful vote’.
However, with many reports that the talks are inconclusive, due to a too vague definition of the terms on the backstop, Pound traders are remaining cautious.
Cox, however, hit back at these claims, saying:
‘We are discussing detailed, coherent, careful proposals. We are discussing text with the European Union. I am surprised to hear the comments that have emerged over the last 48 hours that the proposals are not clear. They are as clear as day. And we are continuing to discuss them.’
Any announcements of a consensus emerging between the EU and UK today, or over the weekend, could prove Pound-positive as this would heighten the possibility of Theresa May’s deal being accepted by ministers within the House of Commons.
GBP/NOK Forecast: Pound Could Rise on an Extension to Article 50
Sterling traders will be awaiting the release of the UK consumer inflation expectations tomorrow, and with any signs of an increase this could provide some uplift for the Pound.
With next week’s looming parliamentary vote on May’s deal, any indications that ministers will either be backing the deal – or a consensus emerging on the important Irish backstop – would benefit the GBP/NOK exchange rate.
The Norwegian Krone, meanwhile, will remain sensitive to any sudden geopolitical developments, with sights particularly set on the US-China trade talks, which are expected to conclude imminently.
The GBP/NOK exchange rate, however, will remain sensitive to Brexit developments this week, with any indications that the EU will agree to an extension to Article 50 could see the Pound rise.