Pound to Norwegian Krone Exchange Rate Continues to Slide
Update 16:35 GMT 04/11/2020:
The Pound to Norwegian Krone (GBP/NOK) exchange rate continued to tumble through Wednesday’s European session, as investors sold the Pound (GBP).
At the time of writing, GBP/NOK is trending in the interbank region of 12.11. This means the pair has shed a good chunk of last week’s gains.
The Pound continues to be rattled by market uncertainty. The tight US 2020 Presidential election, combined with Britain’s uncertain coronavirus and Brexit outlooks, leaves Sterling in a risky position.
The Norwegian Krone (NOK), on the other hand, is benefitting from resilience in prices of oil. Oil is a major export for Norway, so NOK is often correlated to oil prices.
(Originally published 12:54 GMT 04/11/2020)
Pound to Norwegian Krone Exchange Rate Hit by Tight US Presidential Election
An unexpectedly close US 2020 Presidential Election race has left the Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate highly volatile. Global markets are jittery as polls continue to be counted and the outlook for the election result remains unclear.
Since opening this week at the interbank level of 12.34, GBP/NOK has seen mixed and volatile movement.
Yesterday saw GBP/NOK tumble. While the pair briefly attempted to rebound overnight, GBP/NOK fell again this morning as the Pound (GBP) was hit by US election uncertainty.
At the time of writing, GBP/NOK is trending in the interbank region of 12.26. This still puts it well above last week’s opening levels of 12.03.
The US 2020 Presidential Election remains the primary focus for forex markets. However, tomorrow’s central bank news will be closely watched as well.
Pound (GBP) Exchange Rates Rattled as US Election Uncertainties Keeps Markets Cautious
The Pound (GBP) has been gaining on market optimism in recent weeks. Hopes for a Brexit deal and smoother potential negotiations in general have offset some concern about Britain returning to coronavirus lockdown.
However, the shock of the US 2020 Presidential Election being much tighter than expected has knocked the Pound’s optimism today.
The Pound is literally sinking against the dollar this morning, as the outcome of US elections is still on a knife-edge
GBPUSD 1.2938 -0.0120 -0.92%@graemewearden
— BP PRIME UK (@bpprimeuk) November 4, 2020
Markets had been betting a clear and decisive win for Democratic Party challenger Joe Biden, but now fears of a contested election are keeping markets hesitant to take risks.
Sterling has been trading on market risk-sentiment due to hopes for a Brexit deal, so this uncertainty is making markets anxious on the Pound as well.
Norwegian Krone (NOK) Exchange Rates Resilient on Oil Prices
The Norwegian Krone (NOK) is typically more influenced by market risk and trade-sentiment than the Pound (GBP).
However, it is currently up against Sterling as markets are speculating that Norway’s outlook will recover comfortably in 2021.
According to Economist at MUFG:
‘We expect the Krone to rebound gradually in the year ahead as the COVID-19 shock fades and strengthening global recovery supports a higher price of oil. However, it remains subject to downside risks in the near-term.’
The Krone has also been benefitting from oil prices this week. Oil is a notable export for Norway, so a rebound and steadying of oil prices amid the US Presidential Election has been supportive for NOK.
Pound to Norwegian Krone (GBP/NOK) Exchange Rate Volatility Likely on Election and Central Bank News
The coming sessions are likely to see continued volatility and fluctuations in the Pound to Norwegian Krone (GBP/NOK) exchange rate, as the US political situation continues to develop.
US President Donald Trump has already indicated that he may contest the election result if it does not end in his favour. Fears of a contested result could lead to a recount or even civil unrest.
These factors are all more likely to make markets risk-averse, which could keep both the Pound (GBP) and Norwegian Krone (NOK) jittery.
Aside from the focus on US politics though, tomorrow will see November decisions from central banks.
Both the Norges Bank and Bank of England (BoE) will hold November policy decisions on Thursday. The BoE is expected to become more dovish in reaction to Britain’s new coronavirus lockdown.
Overall, the Pound to Norwegian Krone (GBP/NOK) exchange rate could see sudden sharp movements on political developments in the coming sessions.