Pound Norwegian Krone (GBP/NOK) Exchange Rate Muted despite Higher Than Forecast Norwegian Retail Sales
The Pound Sterling Norwegian Krone (GBP/NOK) exchange rate remains muted today, currently trading at an inter-bank rate of 11.0707kr.
Despite Norwegian retail sales growth jumping by a better-than-expected 0.8% in July month-on-month and 0.9% year-on-year, the Norwegian Krone (NOK) remained under pressure this morning after household consumption of goods plunged by -1.8% – the lowest level since January 2018 – and July unemployment rose from 77,016 to 78,600.
Pound (GBP) Muted as Brexit Batters Business Confidence
Brexit pessimism has led to a sharp decline in business confidence, with the Lloyds Bank Business Barometer falling from 13% to 1% in August, the lowest level since December 2011.
Increasing concern for the UK economy also saw the GfK consumer confidence index slump from -11 in July to -14, the weakest reading since January and joint weakest since 2013.
Commenting on Friday’s data, Joe Staton, Client Strategy Director at GfK explained:
‘Until Brexit leaves the front pages – whenever that will be – consumers can be forgiven for feeling nervous not just about the wider economy but also about their financial situation.’
Both reports suggest the UK economy faces an uphill recovery in the face of declining consumer and business optimism.
Norwegian Krone (NOK) Flat despite Increased Chance of Norges Bank Rate Hike
Meanwhile, Thursday’s data releases revealed a spike in Norwegian economic growth for the second quarter of 2019.
Mainland GDP rose by 0.7%, up from a revised 0.5% for the first quarter. Despite declining exports, economic growth rose in response to domestic demand and rising capital investments.
The data increases the chance of a September rate hike from Norges Bank, but failed to lift NOK exchange rates.
Senior Economist at Nordea, Erik Bruce noted:
‘Norges Bank will view today’s report as very much in line with its expectations. Hence, no need to deviate from the rate path which suggests a September hike.’
Pound Norwegian Krone Outlook: Will Disappointing UK Manufacturing Weigh on GBP?
Looking ahead to next week, the GBP/NOK exchange rate could soften if August’s UK manufacturing PMI shows another contraction in output.
Economists have forecast that the index rose from 48 to 49.5 in August. While this would be an improvement, the measure would still be below the 50 mark separating growth from contraction.