Pound to Norwegian Krone Continues to Rally as Norges Bank Decision Fails to Boost NOK
The Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate continues to surge today. This week’s rise in UK coronavirus restrictions has done little to limit the Pound’s (GBP) gains, as the Norwegian Krone (NOK) continues to fall.
This week has seen significant gains for GBP/NOK as Sterling capitalises on Krone weakness.
Since opening this week at the interbank level of 11.74, GBP/NOK as surged. GBP/NOK is trending near a high of 12.18 at the time of writing, the pair’s best levels since May, four months ago.
So long as markets remain averse to risk-correlated currencies, the Norwegian Krone outlook may remain more bearish.
Pound (GBP) Exchange Rates Rebound on Political Hopes but Uncertainty Persists
The Pound (GBP) has been able to advance this week. Against many rivals the Pound briefly fell before recovering, but against the Norwegian Krone (NOK) it has seen strong gains.
This is partially due to signs that Britain’s new coronavirus restrictions were not as strict as some feared. Hopes for UK-EU Brexit negotiations to improve also bolstered Sterling.
However, the Pound outlook remains filled with uncertainties overall. Analysts are concerned about Britain’s economic health and the survival of businesses as the government’s furlough system comes to an end.
‼️ Proportion of UK businesses still trading revised down to 84% from 97%, according to @ONS
Result of including more smaller businesses in the data. pic.twitter.com/08IGh1rVXr
— Andy Bruce (@BruceReuters) September 24, 2020
Norwegian Krone (NOK) Exchange Rates Fail to Benefit from Norges Bank Decision
The Norwegian Krone (NOK) has been battered by market risk-aversion this week. As coronavirus fears surge across Europe and commodities weaken, the risk-correlated Norwegian Krone was hit.
This morning saw the Norges Bank hold its September policy decision. However, the bank’s tone was largely unsurprising. The bank struck a cautious tone and signalled that no changes were likely for a long time to come.
As the Norges Bank is typically fairly hawkish for a major central bank, this disappointed investors as well. According to Petr Krpata at ING:
‘With NOK already struggling heavily during the recent fall in risk assets, the NB has clearly not provided a helping hand (rather the opposite) and NOK continues its decline as well as it underperformance vs G10 peers.’
Pound to Norwegian Krone (GBP/NOK) Exchange Rate Remains Sensitive to Coronavirus
The Pound to Norwegian Krone (GBP/NOK) exchange rate has been dominated by global coronavirus fears this week, and this is likely to remain the focus for both currencies.
The Pound (GBP) could see fresh pressure if Britain’s coronavirus situation worsens. If UK-EU Brexit relations worsen as well, Sterling could lose some of its recent strength.
As for the Norwegian Krone (NOK), it is likely to see continued weakness if markets continue to avoid risk and trade-correlated currencies.
Data could influence the Pound to Norwegian Krone exchange rate as well.
Norwegian retail sales data on Monday, as well as UK growth rate data on Wednesday, could both be influential for the Pound to Norwegian Krone (GBP/NOK) exchange rate.