GBP/NOK Exchange Rate Improves as Norwegian Manufacturing Output ‘Nearly Unchanged’
The Pound Norwegian Krone (GBP/NOK) exchange rate edged higher this morning, with the pairing currently trading around 11.658kr after Norwegian’s manufacturing output figure for November beat forecasts and grew by 5.6%.
Statistics Norway said in its statement:
‘[M]anufacturing output was nearly unchanged in the period September-November 2019 compared with the previous three-month period. The industry ships, boats and oil platforms contributed the most to pull up the overall manufacturing output, with an increase of 3.9 per cent. Thus, this industry continued the almost uninterrupted increase it has experienced since the beginning of 2018.’
The Norwegian Krone (NOK) failed to benefit from the report, however, as the export-reliant economy continues to suffer from geopolitical uncertainty in the Middle East, which is having a knock-on impact on European trade.
However, with oil prices surging after Iran launched a missile attack on the US and coalition military bases in Iraq, sparking fears of an open conflict between Tehran and Washington.
As Norway is a major European exporter of oil, we could see the NOK/GBP exchange rate begin to benefit from the increasing price of European benchmark oil prices.
GBP/NOK Exchange Rate Rises as Commons Faces its Second Day of Brexit Debates
The Pound (GBP) rose against the Norwegian Krone (NOK) now that the House of Commons will face its second day of debates on the UK-EU Brexit Withdrawal Agreement Bill, with discussions set to end tomorrow after which the Bill will be sent onto the House of Lords for examination.
Due to the Government’s substantial majority in Parliament, the Bill is expected to pass with a substantial majority and effectively clearing the path toward Britain’s exiting from the European Union on the 31st January.
Today will see Prime Minister Boris Johnson meet with the European Commission President, Ursula von der Leyen, in which he is expected to firmly oppose an extension to the post-Brexit transition period.
A spokesperson for Downing Street commented:
‘He is expected to tell President Von der Leyen that, having waited for over three years to get Brexit done, both British and EU citizens rightly expect negotiations on an ambitious free trade agreement (FTA) to conclude on time. There will be no extension to the implementation period, which will end in December 2020 as set out in the political declaration. The withdrawal agreement bill enshrines this in UK law.’
If tensions arise between the UK and EU over Boris Johnson’s requests, however, we could see the GBP/NOK exchange rate ease as uncertainty returns over the UK’s economic future post-Brexit.
GBP/NOK Outlook: Brexit Developments in Spotlight
Sterling traders will be looking ahead to tomorrow’s speech from the Bank of England’s Governor, Mark Carney. Any dovish comments about the UK’s economy post-Brexit, however, could prove Pound-negative.
Tomorrow will also see the publication of December’s BRC Like-for-Like retail sales figure, which is forecast to improve from -4.9% to 2%. As a result, this could bolster market confidence in the British economy.
Meanwhile, NOK investors will be awaiting Friday’s publication of Norway’s core inflation figure for December, which is set to hold at 0.1%.
Brexit developments will continue to drive the GBP/NOK exchange rate this week, with any indications that we could be facing a fairly smooth transition from the EU beyond the 31st January boosting the Pound as uncertainty over Brexit is effectively resolved.