GBP/NOK Exchange Rate Slumps as Markets Welcome Norwegian Labour Report
The Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate is on the defensive again this morning as markets cheer the release of Norway’s latest employment figures.
At the time of writing the GBP/NOK exchange rate is trading at NOK10.8020 this morning, down roughly 0.3% from the day’s opening rate.
Norwegian Krone (NOK) Bolstered as Unemployment Falls to Six-Year Low
The Norwegian Krone (NOK) is accelerating again this morning after markets welcomed Norway’s latest employment report
The report revealed unemployment fell unexpectedly from 3.5% to 3.2% in April, striking a new six year low.
The upbeat data was supported by a persistent rally in crude prices which helped to further buoy the oil-sensitive Krone.
Brent crude broke through to $66 a barrel in the early hours of Wednesday, against a backdrop of rising tensions in the Middle East which threaten to limit production in the region.
This adds to the recent strength of the Krone, which was boosted last week as the Norwegian central bank – the Norges Bank – bucked the dovish trend that has prevailed within most other G10 central banks and raised interest rates.
While the move was expected, Norges Bank’s indication that it will ‘most likely’ hike again this year has underpinned the Krone’s recent rally.
Pound (GBP) Muted as BoE Warns of Impact of Brexit Uncertainty
At the same time, the Pound (GBP) is struggling to hold its ground this morning as Bank of England (BoE) Governor Mark Carney appears before parliament’s Treasury Select Committee.
Unsurprising the focus of MP’s questioning has been on Brexit, with Carney being grilled by MPs on how the BoE is dealing with the challenges it brings.
This saw Carney warn that no-deal Brexit fears as damaging the UK’s short-term economic growth and that leaving the EU without a deal in place could force the BoE to implements stimulus measures, although he stressed that a rate cut would not be ‘automatic’.
While his comments offered nothing markets had not already heard, Carney’s warnings appeared enough to cap any upside potential in the Pound this morning.
GBP/NOK Exchange Rate Forecast: UK Political Uncertainty to Limit Potential for Sterling Recovery?
Looking ahead, the Pound to Norwegian Krone (GBP/NOK) exchange rate is likely to remain on the back foot for the foreseeable future as heightened political uncertainty in the UK continues to limit the appeal of Sterling.
This comes as Conservative leadership rivals Boris Johnson and Jeremy Hunt jostle to replace Theresa May as Prime Minister, with GBP investors unnerved by the candidates’ plans to try and renegotiate the EU withdrawal agreement amid fears it will lead to a no-deal Brexit.
In the meantime, the publications of Norway’s latest retail sales could take some of the wind out of the Krone’s sails on Thursday as economist forecast sales growth will have contracted sharply in June.