GBP/NOK Exchange Rate Sinks, UK Economic Outlook Darkens on Lockdown Extension
The Pound to Norwegian Krone (GBP/NOK) exchange rate fell by -1% today as the UK Government is now expected to extend its lockdown by up to three weeks to curb the spread of the coronavirus. The pairing currently trading around 13.04kr.
Matt Hancock, the UK’s Health Secretary, said that it was ‘not likely in the short term’ that the UK would return to normal, while adding that the number of Covid-19 deaths was still ‘far too high’.
The epidemiologist and researcher Professor Neil Ferguson, who is a direct advisor to Downing Street on matters of the coronavirus, also added that many elements of the lockdown would have to remain in place until a vaccine was made available.
Journalists should stop asking about an ‘exit strategy.’ There is only one way we can ‘exit’ full lockdown and that is when we have a vaccine. Until then, we need to find ways we can adapt society and strike a balance between the health of the nation and our economy . #COVID19
— Nadine Dorries 🇬🇧 (@NadineDorries) April 15, 2020
Pound (GBP) investors are also becoming increasingly concerned over the UK-EU Brexit negotiations, which reconvened this week without any signs that the UK’s leaving date would be extended beyond the 31st December deadline.
The International Monetary Fund (IMF) has, however, called for an extension to the Brexit trade talks.
Kristalina Georgieva, the Managing Director at the IMF, commented:
‘I really hope that all policymakers everywhere would be thinking about [reducing uncertainty]. It is tough as it is, let’s not make it any tougher.’
‘My advice would be to seek ways in which this element of uncertainty is reduced in the interests of everybody, the UK, the EU, and the whole world.’
Consequently, Sterling investors are becoming increasingly concerned for the British economy which is facing a twin threat from both Brexit uncertainty and the coronavirus pandemic.
Norwegian Krone (NOK) Rises as Norway Eases Lockdown Restrictions
The Norwegian Krone (NOK) edged higher against the Pound (GBP) after Norway reopened its immigration services, sending a positive signal that Norway’s coronavirus emergency measures may be further relaxed.
Norway’s Health Minister Bent Høie however warned that a continued lifting of the restrictions was not guaranteed.
Mr. Høie commented:
‘Soon hairdressers are going to open their doors again, and physiotherapists will meet patients face-to-face. It will be very easy to think that everything is back to how it was before, but I must emphasise that we are still far away from how things were before.’
As a result, the Norwegian Krone (NOK) has benefited from rising hopes that Norway’s economy could slowly begin cautious steps to recover its economy.
GBP/NOK Forecast: Could Returning Brexit Fears Drag Sterling Lower?
Norwegian Krone (NOK) investors will be keeping a close eye on Norway’s developments as it begins to ease its lockdown restrictions. If restrictions continue to be cut back, we could see NOK continue to rise as hopes for the nation’s economic recovery grow.
The Pound (GBP) will remain sensitive to Brexit developments this week, with the UK and the EU reconvening talks amid the coronavirus crisis.
The GBP/NOK exchange rate could, therefore, sink lower if the UK insists on holding onto the 31st December deadline as this could potentially force Britain to leave the European Union without a deal.