Pound Sterling Norwegian Krone (GBP/NOK) Exchange Rate Extends Gains on Norwegian Manufacturing Dip
The Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate extended its bullish run further this morning as the Norwegian manufacturing PMI fell short of forecast.
Rather than accelerating on the month the PMI instead unexpectedly dipped from 56.3 to 53.8, reflecting the impact of weakening global trade conditions.
Although this still left the manufacturing sector in a solid state of growth, comfortably above the index’s neutral baseline of 50, the mood towards the Norwegian Krone (NOK) still soured.
With the oil market coming under renewed pressure in the face of rising US production investors saw little incentive to support the risk-sensitive Krone today.
Signs of Bank of England Caution May Dent GBP/NOK Exchange Rate Uptrend
However, the GBP/NOK exchange rate could be knocked of its monthly high this afternoon as markets react to the Bank of England’s (BoE) latest policy decision.
Interest rates are expected to remain on hold as a result of ongoing Brexit-based uncertainty, limiting the potential for further Pound Sterling (GBP) gains.
Even so, signs that policymakers are taking a more optimistic view of the economic outlook could help to keep GBP exchange rates on a stronger footing.
A shift towards greater caution in the quarterly Inflation Report may weigh heavily on the Pound, though, as investors continue to assess the UK’s economic health.
Any lowering of the BoE’s forecasts could see the GBP/NOK exchange rate slump over the course of the afternoon.
Tightening Labour Market to Support Norwegian Krone (NOK) Exchange Rates
Support for the Norwegian Krone may pick up ahead of the weekend, meanwhile, if April’s unemployment figure shows an improvement.
Evidence that the Norwegian labour market is tightening would give investors greater cause for confidence in economic outlook, pointing towards greater resilience.
On the other hand, another underwhelming figure would leave NOK exchange rates vulnerable to fresh selling pressure.
As long as oil prices continue to trend lower this is likely to limit the potential for any Norwegian Krone gains, especially if market risk appetite fails to show signs of picking up.
If US labour market data falls short of forecast, however, this could offer NOK exchange rates a boost tomorrow.
UK Services PMI Rebound Forecast to Boost Pound Sterling (GBP) Demand
A fresh rallying point may in store for the Pound on Friday if April’s UK services PMI rebounds solidly on the month.
After the surprise contraction seen in March investors are hoping for evidence that the service sector returned to a state of growth at the start of the second quarter.
As the service sector remains the primary growth engine of the UK economy any signs of weakness here put a significant drag on the overall gross domestic product.
Evidence that the sector recovered some of its lost momentum in April could thus see the GBP/NOK exchange rate extending its gains further heading into the weekend.
If the underlying details of the PMI still point towards softness, though, this could limit the appeal of Pound Sterling.