Pound Sterling Norwegian Krone (GBP/NOK) Exchange Rate Slides despite Surprise Rise in UK GDP
The Pound Sterling Norwegian Krone (GBP/NOK) exchange rate slipped today, and the pairing is currently trading at an inter-bank rate of 11.1213kr.
On Wednesday morning data revealed that UK GDP rose by a higher-than-forecast 0.2%, showing that the economy continued to expand in February.
Over the last quarter GDP rose by 0.3%, and on an annual basis the economy expanded by 2%, the highest rate of growth since late 2017.
However, this could do little to offset positive Norwegian data and Brexit anxieties ahead of this evening’s emergency EU summit.
Commenting on the GDP release, the Office for National Statistics’ (ONS) Rob Kent-Smith said:
‘GDP growth remained modest in the latest three months. Services again drove the economy, with a continued strong performance in IT.
‘Manufacturing also continued to recover after weakness at the end of last year with the often-erratic pharmaceutical industry, chemicals and alcohol performing well in recent months.’
Sterling (GBP) falls despite UK Manufacturing at Highest Level in Over a Decade
Further data released this morning revealed that both UK manufacturing production and industrial production rose in February.
Manufacturing surged amid Brexit stockpiling as nervous companies appear to have driven the 0.9% growth in manufacturing.
Commenting on the data, the ONS stated:
‘Following a period of contraction, output in production and manufacturing has risen for the second month in a row, the latter driven by domestic demand. Manufacturing is now at its highest level since April 2008.
‘This was driven by pharmaceuticals, food products (including beverages) and chemicals, although it was partially offset by a fall in motor vehicle production.’
Norwegian Krone (NOK) Rallies on Expectations of Further Interest Rate Hikes
The Norwegian Krone (NOK) rose against the Pound (GBP) following the release of a slew of better-than-forecast inflation data.
March’s annual Producer Price Index (PPI) rose by an eyebrow-raising 5.2% despite markets predicting this figure would remain stagnant.
Further buoying the Krone was the rise in core inflation in March, which went up by a better-than-expected 2.7% annually and 0.3% month-on-month.
It is likely this buoyed the Krone as it raised expectations of another rate hike by the Norges Bank in the coming months.
In a daily note, Commerzbank strategists said:
‘The positive economic development as well as price pressure is making rate hikes necessary.’
Pound Norwegian Krone Outlook: Will the GBP/NOK Exchange Rate Rise on Brexit Optimism?
Looking ahead to this evening, the Pound (GBP) may rise against the Norwegian Krone (NOK) following the emergency European Council summit.
If the European Union grants the Prime Minister an extension to Article 50 of up to a year as expected, it could spark a fresh wave of Brexit optimism and buoy Sterling.
Once Theresa May returns from the summit, cross-party talks between the Conservatives and Labour are expected to continue, which could further buoy the Pound.
If reports suggest further cross-party talks prove successful in breaking the Brexit deadlock in Parliament, the Pound Norwegian Krone (GBP/NOK) exchange rate is set to rise.