GBP/NOK Exchange Rate Rises as Norway’s Economic Outlook Dims on US-China Trade Tensions
The Pound to Norwegian Krone (GBP/NOK) rose by 0.3% today, with the pairing currently trading around 11.94kr.
The Norwegian Krone (NOK) struggled today after the latest Norway Manufacturing PMI fell below forecasts to 43.3, leaving many NOK investors concerned for Norway’s economic performance in the months ahead.
IMA and DNB Markets said in their statement:
‘The July numbers are more uncertain than for most other months due to the holidays, when some firms halt production.’
Meanwhile, NOK investors have become more concerned that rising tensions between the US and China could weigh on Norway’s export-reliant economy.
Raghuram Rajan, the former Governor at India’s Central Bank, highlighted that the US and China should step up as tensions – or a fall out – between the world’s two largest economies could affect emerging market economies and nation’s heavily reliant on the smooth running of a global economy.
However, any signs that the world’s two largest economies would fall out would negatively weigh on value in Norway’s oil and gas production.
Pound (GBP) Rises as UK Factory Output Grows at Fastest Rate Since 2017
The Pound (GBP) rose against the Norwegian Krone (NOK) today following the release of the UK Manufacturing PMI figure for July, which fell from 53.6 to 53.3.
However, with UK factory output growing at its fastest rate since 2017, some GBP investors are optimistic about Britain’s economic recovery in the months ahead.
Rob Dobson, Director at IHS Markit, was notably dovish in his statement, however:
‘Despite the solid start to the recovery, the road left to travel remains long and precarious. An extended period of growth is still needed to fully recoup the ground lost in recent months. This is also the case for the labour market, where job losses are continuing despite businesses reopening.’
Meanwhile, Sterling traders are eyeing the UK’s coronavirus developments after several lockdowns were reinstated in parts of northern England. As a result, GBP investors have reasons to be concerned over the possibility of a second wave of Covid-19.
GBP/NOK Outlook: Could a Dovish Bank of England Drag Down Sterling This Week?
Pound (GBP) investors will be looking ahead to Wednesday’s release of the latest Markit Services PMI for July. Any signs of improvement in the UK’s largest sector would prove GBP-positive.
Meanwhile, Norwegian Krone (NOK) investors will be looking further head to Friday’s release of Norway’s Manufacturing Output figure for June. If this falls below forecasts, however, we could see NOK suffer.
The GBP/NOK exchange rate will remain sensitive to growing speculation ahead of Thursday’s interest rate decision from the Bank of England (BoE). Any indications that the BoE could be dovish in its monetary policy would prove GBP-negative.