Pound Norwegian Krone (GBP/NOK) Exchange Rate Falls despite Dovish Norges Bank
The Pound Norwegian Krone (GBP/NOK) exchange rate slumped today as Brexit remained in the spotlight, with the pairing currently trading around 11.7517Kr despite Norway’s Norges Bank leaving rates on hold at 1.5%.
While the bank kept its rate path steady, policymakers noted that uncertain global markets and trade concerns meant the current rates were unlikely to change in the near/medium term.
Following this, the Krone edged down slightly, but the decline was contained by a stronger Swedish Krona (SEK), with the two currencies typically correlated.
The Swedish crown edged up as Riksbank stayed with its plan to raise rates in December. Commenting on this, chief EMEA FX strategist and IR strategist at ING, Petr Krpata said:
‘We don’t think that the SEK gains will last for long, because this interest rate increase may be interpreted by the market as a policy rate mistake. [The bank may be] hiking into a downturn.’
Sterling (GBP) Slides as Macron Pushes for ‘Tighter Deadline’
The Pound slumped on Thursday as investors sit on their hands ahead of a formal decision from the European Union on an extension to Article 50.
The length of any delay could fuel further market uncertainty, with the Prime Minister vowing to push for a general election if Brexit drags on into the New Year.
While reports suggest French President, Emmanuel Macron is pressing for an extension of no more than 15 days, other EU leaders disagree.
Both the German Chancellor, Angela Merkel and Irish Taoiseach, Leo Varadkar have offered support for a three-month extension, arguing that Macron’s preferred delay is too short.
Hussein Sayed, Chief Market Strategist at FXTM commented:
‘Although the French are pushing for a tighter deadline, the base case scenario remains until January 31. If this extension is granted, then a UK general election will likely be the next step.
‘If an election is called and approved by the House of Commons, expect to see more volatility in Sterling, although any downside pressure will be limited given that a hard Brexit scenario is now off the table.’
Pound Norwegian Krone Outlook: Will Brexit Uncertainty Push GBP Lower?
Looking ahead, Brexit will remain front and centre in Pound exchange rate movement as the UK awaits the European Union’s decision on a Brexit delay.
If the EU decide to give the UK a three-month extension, increased Brexit uncertainty is likely to see Sterling slide further against the Norwegian Krone.