Pound Norwegian Krone (GBP/NOK) Exchange Rate Falls Sharply as UK and EU Fail to Break Impasse
This morning, the Pound Norwegian Krone (GBP/NOK) exchange rate fell by around 0.8%, and is continuing to slide, with the pairing currently trading at around 11.2912Kr.
Reports have emerged suggesting that a there had not been a breakthrough in discussions between the UK and European Union over the weekend, hitting Sterling sentiment.
These Brexit anxieties are weighing on the Pound; commenting on the impasse in discussions, an unnamed EU official told Reuters:
‘May has boxed herself even deeper into a corner, it seems the second meaningful vote will go ahead on Tuesday but it also seems like it won’t be the last meaningful vote on this.
‘We really want to be over with it now. It’s not going anywhere so even an extension is unlikely to break the impasse. There is not much patience or good will left on our side.’
Norwegian Krone (NOK) Rises on Hopes of Interest Rate Hike
Monday saw the Norwegian Krone rally against a handful of currencies including the Pound.
February’s core inflation rose by an annual rate of 2.6% and the annual inflation figure rose by 8%.
This strong inflation data raised expectations that the central bank, Norges Bank, may raise interest rates in the near future.
Commenting on this possibility, Nordea Strategists said:
‘This makes [a] March rate hike from Norges Bank a complete done deal, which is a positive for the currency.’
Last Week: Norwegian Krone (NOK) Jumps as Shelving Oil and Gas Investments Mooted
Last week, Norway’s Government Pension Fund Global (GPFG) has said it would phase out oil exploration and drop investments in firms that explore for the fossil fuels.
Following this, the Pound Norwegian Krone (GBP/NOK) exchange rate plummeted.
This shift in strategy had been advised by Norges Bank, and will affect 1.2% of its equity holdings, worth around 66bn Kroner.
The decision is said to have been motivated by a desire to protect the Norwegian economy rather than climate concerns as this will reduce its exposure to oil price falls.
Commenting on the divestment decision, Norwegian Finance Minister, Siv Jensen said:
‘The objective is to reduce the vulnerability of our common wealth to a permanent oil price decline. Hence, it is more accurate to sell companies which explore and produce oil and gas, rather than selling a broadly diversified energy sector.’
Pound Norwegian Krone Outlook: Will the GBP/NOK Exchange Rate Continue to Plummet on Brexit Anxieties?
Looking ahead to Tuesday’s session, the Pound (GBP) could slide further against the Norwegian Krone (NOK) following the release of January’s UK manufacturing production and industrial production.
If the annual manufacturing production contracts as forecast, the Pound could fall further.
UK GDP figures for January are also due for release tomorrow, which could cause a slight upswing in support for Sterling, with GDP growth forecast to rise by 0.2%.
Brexit is still likely to remain the main catalyst for movement in the pairing on Tuesday, as the second ‘meaningful vote’ is scheduled for the evening.
The Pound Norwegian Krone (GBP/NOK) exchange rate could plummet if Theresa May’s Brexit deal gets rejected by Parliament, as is expected by most analysts.