Pound Sterling Norwegian Krone (GBP/NOK) Exchange Rate Muted as UK Wage Growth Disappoints
The Pound Sterling Norwegian Krone (GBP/NOK) exchange rate was left flat as data showed the UK labour market cooled, leaving the pairing trading around 11.7463Kr.
On Tuesday, data showed that the UK labour market was showing signs of slowing despite the unemployment rate dipping back down to 3.8%, the lowest level since early 1975.
The number of people in work fell by around 58,000, leaving Sterling under pressure as this was the largest drop in employment in four years.
The number of vacancies in the UK plummeted by the largest quarterly amount in a decade, although the Office for National Statistics (ONS) revealed:
‘The employment rate is higher than a year ago, though broadly unchanged in recent months. Vacancies have seen their biggest annual fall since late 2009, but remain high by historical standards.’
The Pound was left under pressure as wage growth disappointed, rising by just 3.6% in the three months to September.
Today’s figures likely suggest that the Bank of England (BoE) will leave rates unchanged for the unforeseeable future, with Pantheon Macroeconomics’ economist, Samuel Tombs stating:
‘The pace of weakening in the labour market remains gradual enough for the Monetary Policy Committee to hold back from cutting bank rate over the coming months.’
Norwegian Krone (NOK) Flat as Norwegian Economy Expands
The Norwegian Krone was left muted against Sterling on Tuesday after data revealed the Norway’s economy expanded at a steady pace in the third quarter.
Helped by an increase in electricity production and manufacturing, the Norwegian economy expanded 0.7%.
Commenting on this morning’s data, Danske Bank chief economist, Frank Jullum said:
‘The figures confirm our view of a continued above trend growth despite the global slowdown. This is marginally lower than Norges Bank expected in the MPR in September, but this was acknowledged already at the interim meeting in October.’
This likely provided the Krone with an upswing of support and offset recent election optimism in GBP sparked by Brexit Party leader, Nigel Farage after he revealed his party would not contest Conservative seats won in the 2017 election.
US-China Trade Optimism Buoys Oil Prices
The Norwegian Krone was left flat despite a rise in oil prices, as Brent crude LCOc1 rose 47 cents thanks to US-China trade optimism.
US President Donald Trump said on Saturday that talks with Beijing were moving along ‘very nicely’ but he would only make a deal if it was the right one for the United States.
Meanwhile, NOK remained under pressure ahead of President Trump’s speech in which markets expect him to provide updates on trade discussions and EU auto tariffs.
Commenting on this, Tamas Varga of oil broker PVM said:
‘The oil market is in a holding pattern. The next $5-$10 move will be decided by economic and trade considerations.
‘He is widely expected to delay his decision to impose tariffs on European car and auto part imports and will also shed further light on the status of the trade negotiations with China.’
Pound Norwegian Krone Outlook: Will Weak Inflation Weigh on GBP?
Looking ahead to Wednesday, the Pound (GBP) is likely to slide against the Norwegian Krone (NOK) following the release of the UK’s inflation data.
If inflation falls further from the Bank of England’s (BoE) target of 2%, Sterling sentiment is likely to fall.
Political developments are likely to remain in the spotlight as the UK gets closer to the 12th December general election.
If there are further reports suggesting the Conservative Party are likely to remain in power, reducing the chance of Brexit uncertainty it is likely to offset weak inflation data and cause the Pound Norwegian Krone (GBP/NOK) exchange rate to rise.