Pound Sterling Norwegian Krone (GBP/NOK) Exchange Rate Slumps Ahead of Final Day of Brexit Negotiations
The Pound Sterling Norwegian Krone (GBP/NOK) exchange rate slumped by around -0.6% on Thursday morning. This left the pairing trading at around 11.5946Kr.
Sterling struggled against the Norwegian Krone as the increase in US-China tensions left markets feeling cautious.
Amid accusations of spying, Washington has given Beijing until Friday to close its consulate in Houston, Texas. Added to this, President Donald Trump also noted it was ‘always possible’ for other missions to be forced to close.
Brexit tensions also continued to weigh on Sterling, as GBP extended Wednesday’s losses. Concerns that the UK will be unable to secure a trade deal with the EU before the end of the transition period dominated markets on Wednesday.
MUFG’s head of research, Derek Halpenny noted:
‘The performance of the Pound in recent weeks suggests Brexit risks are starting to play a role.’
The Pound was able to remain steady against the US Dollar, but struggled against NOK in the last day of Brexit negotiations.
Britain’s foggy economic outlook also weighed on the currency as well as the fact the country will not be part of the EU’s €750 billion recovery package.
The country’s rising debt levels have also worried investors, as public spending jumped as the government scrambled to find way to prevent a potential wave of unemployment.
Norwegian Krone (NOK) Jumps as Oil Prices Rise
The Norwegian Krone was offered support after data revealed that the country’s industrial confidence edged higher in Q2.
Second quarter confidence rose from an upwardly revised -17.4 to -10.1.
However, statistics also revealed that May’s unemployment rate rose to a higher-than-expected 4.6%.
Meanwhile, the Krone was able to make gains against the Pound as oil prices rose higher on Thursday.
While prices were capped after a surprise increase in US crude oil inventories and the ongoing surge in coronavirus cases across the world.
Although, prices have been marking time since jumping to a four-month high earlier in the week on upbeat news about a Covid-19 vaccine.
According to ANZ:
‘Normally inventories of fuel would be heavily drawn upon, but the surge in COVID-19 case numbers has stymied the recovery.’
Pound Norwegian Krone Outlook: UK PMI Surveys in Focus
Looking ahead to Friday morning, the Pound (GBP) could suffer further losses against the Norwegian Krone (NOK).
If Britain’s latest GfK consumer confidence does not rise as high as expected in July, it will dampen Sterling sentiment.
However, GBP could claw back some losses later in the day following the release of the latest UK flash PMI surveys.
If both the manufacturing and service PMIs return to growth in July, it will support Sterling. It is likely this will leave the Pound Norwegian Krone (GBP/NOK) exchange rate largely flat.