GBP/NOK Exchange Rate Rangebound, Norges Bank Maintain ‘Wait and See’ Approach
The Pound to Norwegian Krone (GBP/NOK) exchange rate held steady today, with the pairing currently trading around 11.810kr after the Norges Bank held its interest rate at 1.5%
Oeystein Olsen, Governor of Norges Bank, commented on the bank’s assessment:
‘The [Norges bank] Committee’s current assessment of the outlook and the balance of risks suggests that the policy rate will most likely remain at the present level in the coming period.’
Today also saw November’s Norwegian labour force survey rise from 3.8% to 4%, indicating an increase of unemployment and leaving markets concerned over Norway’s economic health late last year.
Overall, the economic outlook for Norway has remained fairly buoyant this year, with expectations growing that global investment in the nations’ oil and gas industry will continue to level off.
Norges Bank also stated:
‘The risk of a sharp downturn in the global economy appears to have receded somewhat since autumn, but uncertainties surrounding global developments persist. Underlying inflation is close to the inflation target.’
The Norwegian Krone (NOK) has remained relatively subdued, however, as growing concerns over geopolitical developments continue to cap the NOK/GBP exchange rate as doubts grow over the US-China ‘phase one’ trade deal’.
GBP/NOK Exchange Rate Holds Steady on Rising Post-Brexit Trade Concerns
The Pound (GBP) held steady against the Norwegian Krone (NOK) after it was reported that Stefaan De Rynck, a top advisor to Michel Barnier, the European Union’s (EU) Chief Brexit Advisor, warned that ‘dose of realism’ was required for the UK to achieve a comprehensive trade deal with the EU.
Mr De Rynck commented:
‘There should be no misunderstanding of the fact that the next phase will be more complicated to negotiate than the withdrawal agreement’.
As a result, the GBP/NOK exchange rate has remained unmoved as UK markets remain on hold over fears that UK-EU trade talks could flare-up ahead of the 31st January, when the UK is officially due to leave the EU.
Yesterday also saw Chancellor Sajid Javid stoke fears of a hard Brexit, a prospect which has left many Pound traders feeling jittery as the UK’s economic future continues to remain uncertain.
GBP/NOK Outlook: Could Sterling Gain on Rising UK Services PMI?
We could see the Pound to Norwegian Krone (GBP/NOK) rise tomorrow if the UK Markit Services PMI report for January confirms consensus and rises from 50 to 51. As one of Britain’s largest economic sectors, we could see the Bank of England (BoE) rate cut odds ease off and benefit Sterling.
Tomorrow will also see the release of the UK manufacturing PMI for January. However, as this is not expected to emerge from contraction territory, it could hold back some of the Pound’s gains.
Norwegian Krone (NOK) investors, meanwhile, will be paying close attention to geopolitical developments which could affect the trade-reliant Norwegian economy. Amy further flare-ups between the US and China, therefore, would weaken NOK.