Pound Sterling Norwegian Krone (GBP/NOK) Exchange Rate Rallies Ahead of Sunak’s Budget Speech
UPDATE: The Pound Sterling Norwegian Krone (GBP/NOK) exchange rate rallied by around 1.2%, leaving the pairing trading at around 11.8601Kr.
Sterling jumped today as traders eagerly awaited further details on the government’s plans to support the UK’s economy. This boosted the Pound against the Norwegian Krone this afternoon.
Britain’s Chancellor, Rishi Sunak will make a speech on Wednesday, with traders expecting further measures to help offset coronavirus weakness.
According to the Guardian, the Chancellor is considering handing out vouchers of £500 for adults and £250 for children. These vouchers would be used to support areas of the economy worst hit by the coronavirus crisis.
In a note, analysts from Brown Brothers Harriman stated:
‘Prime Minister Johnson’s so-called New Deal for infrastructure spending was deemed insufficient and so UK business interests are urging Sunak to be more aggressive.’
However, traders are cautious as UK-EU trade talks remain in focus. According to strategists at Scotiabank:
‘The Pound will likely be caught in no man’s land throughout this week and will simply take its cue from broad Dollar sentiment.’
Pound Sterling Norwegian Krone (GBP/NOK) Exchange Rate Rises as Norwegian
The Pound Sterling Norwegian Krone (GBP/NOK) exchange rate rose by around 0.4%, leaving the pairing trading at around 11.7736Kr.
The Norwegian Krone edged lower after a slew of downbeat data this morning. NOK slipped as both manufacturing and industrial production slumped in May.
Annual manufacturing production slumped by -8.2%, the lowest level since 2015. Industrial production edged up by a lower than forecast 3% in May, although monthly data showed a -1% fall.
Added to this, the Krone was left under pressure after oil prices slumped on Tuesday as attention turned back to the growing coronavirus cases.
Concerns that the surge in Covid-19 cases in the world’s largest oil consumer, the USA, will put pressure on any recovery in fuel demand.
In the first five days of July, 16 US states recorded record increases in coronavirus cases. This added to mounting worries that measures aimed at slowing the spread of the virus will dampen oil demand.
Florida is now re-introducing limits on reopenings, and two of the most populous states, California and Texas are also reporting high numbers of cases.
According to Jeffrey Halley, Senior Market Analyst, Asia Pacific, of OANDA:
‘Oil is marooned in range-trading mode, balanced by the hopes of economic recovery in Asia and Europe, and concerns in the U.S. and other parts of the world. That means that for now, it lacks the momentum to strongly move one way of the other.’
Sterling (GBP) Makes Gains Ahead of UK-EU Trade Talks
The Pound was able to edge higher today as risk sentiment continued to improve this week.
While risk appetite continued to improve, boosting the riskier Sterling, investors nervously watched coronavirus infections surge in the United States.
Although, despite growing cases in the world’s largest economy and countries such as India, markets are taking the view that further huge lockdown measures are unlikely.
The weakness in the US Dollar (USD) continued to benefit the Pound. According to Terence Wu, a strategist at Singapore’s OCBC Bank:
‘The worst is likely over, but a swift and steady recovery cannot be taken as the base case.’
Meanwhile, the latest round of post-Brexit trade talks between the UK and European Union remain in focus.
Reports revealed that the UK wants to see if there is a chance for progress after last week’s talks ended early. Significant differences remain between the two sides as negotiators attempt to reach a deal.
According to Prime Minister Boris Johnson’s spokesman:
‘[UK chief negotiator David] Frost […] has set out […] that while the talks continue to be constructive there are still significant differences between us. It is a chance to have some further discussions to see what progress might be made.’
Pound Norwegian Krone Outlook: UK-EU Trade Talks in Focus This Week
Looking ahead, Pound (GBP) traders will be focused on ongoing UK-EU trade talks this week which could boost the currency against the Norwegian Krone (NOK).
If traders are optimistic London will be able to reach a trade deal with the European Union during post-Brexit negotiations, it will buoy Sterling.
Meanwhile, Norwegian Krone traders will be looking to Friday’s inflation data. If June’s inflation disappoints, it will send the Pound Norwegian Krone (GBP/NOK) higher at the end of the week.