Pound Sterling Norwegian Krone (GBP/NOK) Exchange Rate Muted on Disappointing British Inflation
The Pound Sterling Norwegian Krone (GBP/NOK) exchange rate remained largely flat, leaving the pairing trading at around 12.9755Kr.
Sterling made some gains this morning as investors continued to move away from the safety of the US Dollar (USD).
With the announcement of a fiscal stimulus package in the USA to backstop the country’s economy, risk appetite rose.
This followed earlier stimulus measures from the US Federal Reserve, and commenting on this, Moh Siong Sim, currency analyst at the Bank of Singapore said:
‘Now we are seeing the fiscal bazooka in action, and that should help further ease the Dollar funding stress.
‘There has been a need for cash to ride through this period where there is a revenue shortfall.’
However, this morning’s gains were limited by British inflation data showing the country’s inflation rate slipped back from January’s six-month high.
February’s data showed that both the cost of video games and fuel fell, although this predated the impact of Covid-19 on the country’s economy.
Inflation continues to remain below the Bank of England’s (BoE) 2% target, as it currently sits at 1.7%
Norwegian Krone (NOK) Falls as Unemployment Jumps to Post-WWII High
The Norwegian Krone remained under pressure after data revealed Norway’s unemployment rate doubled in just one week.
Norwegian unemployment has skyrocketed this month as companies announced huge layoffs and shutdowns in efforts to slow the coronavirus outbreak.
The country’s labour agency said on Tuesday that registered unemployment jumped to a post-World War Two high of 10.9%. This was up from 5.3% just as week ago, and 2.3% at the end of last month.
Labour and Welfare Agency (NAV) chief Sigrun Vaageng said in a statement:
‘The development of the last two weeks is without comparison.’
Added to this, as the coronavirus pandemic continues, it is expected there will be further layoffs. Commenting on this, Handelsbanken Capital Markets wrote in a note to clients:
‘We believe the number of unemployed will continue to rise as strict social-distancing measures limit economic activity.’
Pound Norwegian Krone Outlook: Bank of England (BoE) in Focus
Looking ahead, the Pound (GBP) could edge lower against the Norwegian Krone (NOK) following the release of British retail sales data.
If UK retail sales plummet further than expected, Sterling sentiment could be left dampened.
However, GBP could regain some losses on Thursday after the Bank of England (BoE) give their latest interest rate decision. The bank is also due to release the minutes from last week’s emergency policy meeting.
If minutes reveal policymakers are confident the increased support and emergency rate cut will offer the economy enough support, the Pound Norwegian Krone (GBP/NOK) exchange rate will edge higher.