Pound Norwegian Krone (GBP/NOK) Exchange Rate Jumps as Norway Imposes Fresh Covid-19 Restrictions

Positive Norwegian Retail Sales Fail to Prevent Pound Norwegian Krone (GBP/NOK Exchange Rate Gains

A return to growth in September’s Norwegian retail sales data was not enough to keep the Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate from rallying sharply.

Although sales bounced back from the previous month’s -4.8% decline investors were still disappointed by the data, which only showed growth of 0.3% as opposed to the forecast 1%.

This suggests that the Norwegian retail sector remained in a weaker state at the end of the third quarter, casting fresh doubt over the economic outlook.

With Norway’s government tightening Covid-19 restrictions once again this all left the Norwegian Krone (NOK) with little in the way of support this morning.

Fears of Tighter UK Covid-19 Restrictions Weigh on GBP Exchange Rates

Growing fears for the outlook of the UK economy put something of a dampener on Pound Sterling (GBP), meanwhile.

As the Covid-19 death toll saw a significant jump, pushing the daily number of deaths to 367, the government came under increasing pressure to act.

Rising calls for another national lockdown aimed at curbing the death toll added to existing worries over the possibility of a renewed economic slowdown in the fourth quarter.

Even so, the relative weakness of the Norwegian Krone ultimately helped the GBP/NOK exchange rate to push higher on Tuesday in spite of these growing concerns.

Norwegian Krone Vulnerable to Rising US Political Tensions

Rising anxiety ahead of next week’s US presidential election could see the Norwegian Krone struggling to make any gains against its rivals.

With markets increasingly wary of the potential for a contested result or further political tensions support for the risk-sensitive Krone could prove limited.

Fresh signs of weakness within the global oil market may also weigh on NOK exchange rates, with fears of a renewed oversupply glut already driving prices lower.

This could put additional pressure on the already-struggling Norwegian economy, given the significant levels of oil that the country exports.

Lack of UK-EU Trade Talks Resolution to Limit Pound Upside

A lower level of UK mortgage approvals may limit the strength of the GBP/NOK exchange rate tomorrow.

Forecasts point towards a modest slowdown in approvals on the month, suggesting a greater degree of caution among households as the prospect of further Covid-19-based disruption looms.

Further volatility could also be in store for the Pound on the back of any developments in ongoing UK-EU trade talks.

If the two sides show signs of moving closer to a final agreement, and officials continue to adopt an optimistic outlook, this may encourage GBP exchange rates to trend higher.

On the other hand, a persistent lack of news relating to the talks could see the Pound falling out of favour with investors in the absence of any fresh optimism.

Louisa Heath

Contact Louisa Heath

Do Not Sell My Personal Information