Pound Sterling Norwegian Krone (GBP/NOK) Exchange Rate Muted as Norwegian GDP Slumps at Fastest Pace on Record
The Pound Sterling Norwegian Krone (GBP/NOK) exchange rate remained flat, leaving the pairing trading at around 11.7376Kr.
The Norwegian Krone struggled and remained flat against the Pound after Norway’s economy plunged into a recession.
Norway’s GDP plummeted at the fastest pace on record in the second quarter as efforts to contain the coronavirus crisis sent the economy into a deep recession.
The mainland economy, which does not include oil and gas production, contracted by -6.3% in the second quarter. This followed a downwardly revised -2.2% fall in Q1.
In a statement, Norway’s national statistics office (SSB) said:
‘The decline in the Norwegian economy in the second quarter was the deepest ever recorded. Quarterly national accounts are available back to 1978.’
Although, the EU outsider fared better than the Eurozone’s -12.1% slump, and Sweden’s -8.6% fall, but weaker than Finland’s economy which slumped by -3.2%.
Brexit Pessimism Continues to Weigh on Sterling (GBP)
The Pound remained under pressure on Tuesday’s session as a lack of economic data left traders focused on Brexit pessimism.
Concerns over the lack of progress during last week’s round of UK-EU trade talks weighed on the British currency.
At the end of last week, both sides confirmed little progress was made. Brussels’ and London’s chief negotiators both blamed each other for the current stalemate.
Investors are not taking huge bets on the Pound. Added to this, a number of investors believe that Britain will be able to secure a last minute deal.
Pound Norwegian Krone Outlook: Traders Focus on Norwegian Unemployment
Looking ahead, the Norwegian Krone (NOK) could suffer losses against the Pound (GBP) following the latest unemployment data.
If Norway’s unemployment rate jumps higher than expected in June, it will weigh on the Krone.
Meanwhile, due to the current Brexit uncertainty for Sterling traders, it is likely the upcoming Bank of England (BoE) speeches will be in focus this week.
Any hints about negative interest rates will weigh on the British currency, and according to Francesco Pesole, FX strategist at ING:
‘We suspect they may continue to sort of keep the threat on that they will cut again, without actually cutting rates.’
Downbeat, dovish comments from the BoE will leave the Pound Norwegian Krone (GBP/NOK) exchange rate flat.