Pound Norwegian Krone (GBP/NOK) Exchange Rate Slides on Divided BoE Vote
The Pound Sterling Norwegian Krone (GBP/NOK) exchange rate slumped by around -1% today as the Bank of England (BoE) left rates unchanged, with the pairing currently trading at around 11.6705Kr.
The Pound slumped as the central bank left rates unchanged at 0.75% in its final monetary policy meeting before the 12th December general election.
A divided BoE exerted pressure on the Pound as two policymakers, Michael Saunders and Jonathan Haskel voted to slash rates to 0.5%. At the same time, Governor Mark Carney said he would consider a future rate cut if global and Brexit headwinds continued to batter the British economy.
Speaking to reporters on Thursday, Carney said:
‘These are pretty big tectonic forces operating right now. If global growth fails to stabilise or if Brexit uncertainties remain entrenched, monetary policy may need to reinforce the expected recovery in UK GDP growth.’
The bank’s Monetary Policy Report also said headwinds were responsible for the BoE’s decision to downgrade growth forecasts, with the economy predicted to see decline by 1% in the next three years.
Norwegian Krone (NOK) Rises despite Weak Industrial Activity
The Norwegian Krone rose against the Pound today as Norway’s manufacturing production rebounded by 0.8% in September after slumping -1.1% in August.
Added to this, production rose by an annualised rate of 2.9%, providing the Krone with an upswing of support.
However, further data showed that Norway’s industrial production slumped by an annual rate of -8.1%.
While this was the ninth consecutive annual decline in industrial activity, the figures did little to stop NOK rising against the Pound following the dovish BoE meeting.
Pound Norwegian Krone Outlook: Will GBP Extend Losses?
Looking ahead, the Pound (GBP) could extend its losses against the Norwegian Krone (NOK) if election polls predict the current Conservative party lead is at risk.
Markets generally favour a Tory majority on 12th December as this is perceived as the best way to break the parliamentary Brexit deadlock, so any signs the Conservative majority is under threat could see the Pound slump even further.
Meanwhile, the Norwegian Krone could edge higher at the start of next week following the release of Norway’s inflation data.
If the country’s core inflation rate remains close to Norges Bank target of 2% the Pound Norwegian Krone (GBP/NOK) exchange rate could slide further.