Pound to Norwegian Krone Exchange Rate Struggles to Recover despite Sterling Jump
Updated 16:19 GMT 27/03/2020:
The Pound (GBP) was one of the best-performing currencies before markets closed on Friday. It continued to benefit from weakness in the US Dollar (USD) as well as other currencies.
However, the Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate still fell this week overall. GBP/NOK recovered some of this week’s losses, but still looks on track to end the week closer to the interbank level of 12.97.
The Norwegian Krone (NOK) was the best performing currency of the week overall. Reaction to an intervention threat from Norges Bank, as well as slightly calmer market sentiment, helped NOK to recover notably from the previous week’s massive plummet.
GBP/NOK could advance again next week though. If the UK government ramps up fiscal stimulus the Pound could see stronger demand. However, if oil prices show signs of recovery, the Norwegian Krone may see further recovery instead.
(Originally published 09:39 GMT 27/03/202o)
Pound to Norwegian Krone Exchange Rate Falling despite Krone’s Gloomy Outlook
The Pound (GBP) has rebounded from lows this week, but the Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate has still fallen. The Norwegian Krone (NOK) has seen its own surprisingly strong rebound this week, even amid poor oil prices.
GBP/NOK has seen big, sharp movements over the past week, largely due to Krone volatility.
The GBP/NOK interbank level opened this week near a high of 13.87. This was the best level for the pair in over a decade.
However, earlier in the week the Krone mounted a rebound from its shocking plummet last week. At the time of writing on Friday, GBP/NOK was trending closer to the interbank level of 12.78.
Pound (GBP) Exchange Rates Rebound but Not Enough for GBP/NOK Gains
The Pound’s (GBP) performance has been stronger this week so far. However, rather than domestic support this has been largely due to weakness in the US Dollar (USD).
The US Dollar’s weakness has also benefitted other currencies, including the Norwegian Krone (NOK). This is limiting the Pound’s potential for gains.
The Pound has also been supported by hopes for more fiscal stimulus from the UK government.
However, yesterday’s Bank of England (BoE) news and government support for self-employed workers had little notable impact on the Pound’s appeal.
UK Treasury support for the self-employed was widely expected. There is still lingering market uncertainty over whether the government’s fiscal stimulus goes far enough.
Norwegian Krone (NOK) Exchange Rates Steady after This Week’s Surge in Recovery
Last week saw the Norwegian Krone (NOK) sharply collapse across the board. The currency saw historic losses against the US Dollar (USD) due to a combination of market panic.
Coronavirus pandemic, plummeting oil prices, and generally poor market conditions and global anxiety created the perfect storm to undermine NOK. As a result, NOK trended near major lows against the Pound (GBP) over the weekend.
Due to a combination of factors, the Norwegian Krone has recovered a big chunk of those losses this week. NOK had its best day on record against USD this week amid the recovery.
Norges Bank threatened to intervene in currency markets in order to protect the Krone, which some analysts believe helped mark a turning point for the currency’s poor fortunes. On top of this, US stimulus action improving global market liquidity is helping the currency to recover.
According to Manuel Oliveri, Strategist at Credit Agricole:
‘The Krone is among most volatile currencies of late,
While Norges Bank’s intervention stance has been lowering appetite to sell, prospects of more aggressive fiscal stimulus measures around the globe coupled with the Fed’s aggressive stance on monetary policy is helping.’
Pound to Norwegian Krone (GBP/NOK) Exchange Rate Focused on Pandemic Developments
Both the Pound (GBP) and Norwegian Krone (NOK) are still volatile amid the global coronavirus pandemic. Demand for the currencies is likely to remain limited as Britain and Norway struggle to handle and weather the virus.
Upcoming data is likely to be mostly brushed over amid the continued focus on the coronavirus.
As a result, investors will still anticipate further measures from governments and central banks to handle the issue.
For example, if Britain continues to ramp up fiscal stimulus, the Pound is more likely to see a more solid rise in demand.
On the other hand though, the Norwegian Krone’s recovery still has the potential for further gains.
Investors may simply continue to buy it back as global market sentiment gradually shows signs of calming. Any sign of recovery in oil price markets would also boost the oil-correlated Norwegian Krone.
The Pound to Norwegian Krone (GBP/NOK) exchange rate could advance, but its chances of returning to last weekend’s highs currently seem slim.