Pound to Norwegian Krone Exchange Rate Pulled Lower by Surging NOK
While today’s Norges Bank policy decision was largely unsurprising, it was enough to keep the Norwegian Krone (NOK) appealing versus other European currencies and as a result the Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate continued its fall.
Norwegian Krone resilience prevented GBP/NOK from rising much last week, and this week the pair has seen significant losses.
After opening this week near the interbank level of 12.04, GBP/NOK quickly began to tumble. The Pound’s (GBP) movement steadied today, but a strong Norwegian Krone continued to push GBP/NOK lower today.
At the time of writing, GBP/NOK is trending close to a low of 11.72. It was the worst interbank level for the pair in a month.
The Pound remains unappealing due to revived hard Brexit fears. Today’s Bank of England (BoE) news is not expected to impact the currency’s movement that heavily.
Pound (GBP) Exchange Rates Remain Pressured as Bank of England (BoE) Holds December Decision
Since Tuesday, the Pound (GBP) has been hit with a fresh round of hard Brexit jitters. UK Prime Minister Boris Johnson indicated he would prevent the extension of next year’s Brexit transition period.
This meant that if a UK-EU trade deal is not negotiated over the next year, Britain’s economy could still face a cliff edge scenario at the end of 2020.
Concerns over this fear sent the Pound plummeting in recent sessions. The currency lost its recent election-inspired gains.
While Sterling’s movement steadied slightly today and the currency bounced slightly from lows, the latest UK retail sales data only further weighed on the British currency. Retail sales unexpectedly contracted in November, worsening concerns about UK economic activity in Q4.
The Bank of England (BoE) left rates frozen as expected in its December policy decision, but two policymakers dissented and voted for a rate cut. This left further pressure on Sterling in the afternoon.
MPC voted by a majority of 7-2 to keep #BankRate at 0.75% https://t.co/CCBAgbZL56 pic.twitter.com/DrmEJMv2rS
— Bank of England (@bankofengland) December 19, 2019
Norwegian Krone (NOK) Exchange Rates Continue to Climb on Norges Bank and Trade News
The Norwegian Krone (NOK) has seen bullish movement over the past week, holding its ground even against a Sterling (GBP) surge. This has been due to numerous factors, including the US-China preliminary trade deal and Norges Bank speculation.
As the US and China agreed to a ‘phase one’ trade deal, market trade-sentiment rose. This also boosted prices of oil, and as Norway is an oil-exporting nation higher oil prices boosted the Norwegian Krone as well.
Higher oil prices are only part of the Krone’s continued appeal though. The Norwegian Krone remains strong today, as the Norges Bank’s outlook became modestly more positive.
NOK is rising amid the Norges Bank being more optimistic than many other European central banks. According to Petr Krpata from ING:
‘The unchanged / very marginally higher interest rate outlook reflects the growth and CPI forecasts for the next three years which were either unchanged or very modestly upgraded. In short, no big surprise and the Nordic central bank may still raise interest rates next year if the domestic economy does well and NOK is not overly strong.’
Pound to Norwegian Krone (GBP/NOK) Exchange Rate Awaits Friday Data and Brexit News
GBP/NOK Investors will spend the remainder of today digesting the Norges Bank and Bank of England (BoE) developments, as focus will shift towards upcoming data. Brexit, as always, will remain a major focus for Sterling (GBP).
Friday’s session will see the publication of Britain’s December consumer confidence stats from GfK, as well as UK growth rate and business investment results for Q3.
If Britain’s growth rate is worse than expected, investors may become more anxious about how Brexit uncertainty is damaging UK economic activity. This could lead to concerns that 2020 will be more of the same.
Tomorrow’s Norwegian unemployed persons data could influence some late-week Norwegian Krone (NOK) movement. Any shifts in global trade-sentiment or oil prices could prove influential as well.
Of course, if there are any surprising Brexit developments from the UK government, this is likely to overshadow other news or data for the Pound to Norwegian Krone (GBP/NOK) exchange rate.