Pound to Norwegian Krone Exchange Rate Recovery Stumbles as Risk-Sentiment Persists
Updated 16:28 BST 08/04/2020:
The Norwegian Krone (NOK) saw slightly stronger demand this afternoon, keeping the Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate from sustaining a bigger recovery.
After the brief rise in market safe haven demand this morning, markets ultimately ended the day in more of a risk-on mood again. This helped currencies correlated to risk and commodities, like NOK, to strengthen.
Demand for the Pound (GBP) was jittery throughout the day. Nerves about the condition of UK Prime Minister Boris Johnson have softened slightly, but this remains the biggest focus for Pound investors.
The biggest focus for GBP/NOK overall though, will be tomorrow’s OPEC producers meeting. This could have a big influence on oil prices and Norwegian Krone strength.
(Originally published 11:04 BST 08/04/2020)
Pound to Norwegian Krone Exchange Rate Gains on Poor Norwegian Data
The Norwegian Krone’s (NOK) rebound on oil prices has run out of steam today, and the Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate is climbing again. This is despite a lack of particularly supportive UK news.
GBP/NOK trended with a downside bias last week and this movement is continuing this week. Since opening on Monday at the interbank level of 12.97, GBP/NOK has been trending lower.
After touching on a three week worst level of 11.86 overnight, GBP/NOK rebounded slightly. At the time of writing, GBP/NOK is trending closer to the interbank level of 12.75 again.
While market demand for the Pound (GBP) is limited, the pair is gaining on a number of factors. Poor Norwegian data and a stronger US Dollar (USD) are causing Norwegian Krone losses.
Pound (GBP) Exchange Rates Lack Drive as UK Prime Minister Remains in ICU
Investors have been hesitant to move much on the Pound (GBP) this week so far.
At the beginning of the week it was reported that UK Prime Minister Boris Johnson had been hospitalised for coronavirus symptoms. On Monday evening his symptoms reportedly worsened and he had been taken into intensive care.
Mr Johnson has been in the Intensive Care Unit (ICU) since then. This is causing market anxiety over the stability of the UK government.
However, the Pound’s movement on this news has been limited. Overall, the Pound is being driven more by other currencies and market risk-sentiment. According to Viraj Patel, Global FX and Macro Strategist at Arkera:
‘The Pound’s been pulled around by external factors at the moment – largely the broader risk and dollar environment – with key themes in equities and oil markets driving FX sentiment,’
Norwegian Krone (NOK) Exchange Rates Slide as Norwegian Data Disappoints
For much of the past week, the Norwegian Krone (NOK) has been benefitting from global movement.
Prices of oil, Norway’s biggest export, have been rebounding from their worst levels since last week. This is due to hopes that oil producers could finally negotiate production cuts and bring an end to the oil price war.
Overall improved market sentiment had also supported NOK strength, helping it to make further gains earlier this week.
However, the market’s risk-on movement was short-lived. As safe haven demand returns today, the US Dollar (USD) strengthens and the Norwegian Krone sees weaker support.
Today’s poor Norwegian inflation rate results only weighed more heavily on the Krone’s appeal. Inflation fell short of forecasts in almost all major prints in March, according to today’s report.
Pound to Norwegian Krone (GBP/NOK) Exchange Rate Remains Sensitive to Coronavirus and Oil Developments
As the Pound (GBP) has lacked much in the way of drive so far this week, the Pound to Norwegian Krone (GBP/NOK) exchange rate could continue to be driven more by market sentiment.
If the global coronavirus outlook improves further, this could bolster market appetite for risk-taking. This would be more likely to support currencies correlated to commodities like the Norwegian Krone (NOK).
Any sign that oil producers are coming closer to reaching agreement over production cuts could also bolster the oil-correlated Krone.
The Pound’s appeal is limited, but the Pound to Norwegian Krone (GBP/NOK) exchange rate could see more solid demand if UK Prime Minister Boris Johnson’s condition improves.