GBP/NOK Exchange Rate Edges Higher, Labour’s Time Runs Out to Close Polling Gap
The Pound Norwegian Krone (GBP/NOK) exchange rate rose by 0.4% today, with the pairing currently trading around 11.998kr as time is running out for the Labour Party to close its gap with the Conservatives in the opinion polls ahead of the 12th December general election.
With markets generally preferring a Conservative majority next week, due to their promises to resolve Brexit uncertainty by the end of January, hopes are rising that the Tories will consolidate their lead and secure their position ahead of Labour in the polls.
Union Bancaire Privée, a Swiss private bank, said in its statement:
‘Provided the Conservatives win the election, the UK outlook should stabilise. Sterling and domestically-focused equities stand to gain under such a scenario, and a stronger currency, rising consumer spending and increased domestic activity would support industries such as retail, real estate, financials, and airlines.’
Today saw the release of the UK Markit services PMI for November which remained firmly in contraction territory at 49.3.
Duncan Brock, Group Director at the Chartered Institute of Procurement and Supply, was upbeat in his analysis, however, saying:
‘Despite this stagnation, a chink of light emerged amongst the services gloom as optimism for the future was the brightest since July 2019. With the advent of the New Year, firms were in a more hopeful mood that the trading landscape had to improve in 2020.’
NOK/GBP Exchange Rate Sinks as US-China Trade Uncertainty Increases
The Norwegian Krone (NOK) fell against the Pound (GBP) as a potentially delayed US-China trade deal threatens to weaken the trade-reliant Norwegian economy.
This follows comments from US President Donald Trump who suggested that the US could weigh until after the 2020 US elections before securing a ‘phase one’ trade deal with China.
Kyle Rodda, Analyst at IG Markets, Melbourne, commented:
‘[S]everal complex and muddy issues currently being tackled by US and Chinese policymakers at multiple levels of government could all begin to conflate, and start to impact already precarious trade negotiations.
‘The markets feel like trade talks are on a shot-clock now: December 15 being when the buzzer blows. Anything that remotely stands in the way of a deal getting done by then will be reacted to with anxiety.’
In Norwegian economic news, today saw the release of Norway’s current account figure for the third quarter, which eased from 26.53 billion to 23.93 billion and exacerbated fears of a slowing Norwegian economy ahead of the new year.
GBP/NOK Outlook: British Political Developments to Remain in Focus
Norwegian Krone (NOK) traders will be awaiting tomorrow’s release of October’s Norwegian manufacturing output figure, with any signs of improvement likely buoying optimism in the Norwegian economy.
Global economic and political developments will continue to drive the Norwegian Krone this week, with any further flare-ups between the US and China likely to further dampen confidence in the Norwegian currency.
British political developments will continue to influence the GBP/NOK exchange rate this week, with any signs of the Labour Party’s rising in the opinion polls ahead of next week’s vote being Pound-negative.