Pound Norwegian Krone Exchange Rate Muted amid UK Political Jitters
The Pound Norwegian Krone (GBP/NOK) exchange rate is trading close to a three-month low this morning. Sterling struggling to hold its gains in the face of UK political uncertainty.
At the time of writing the GBP/NOK exchange rate is trading at around NOK11.7519. Virtually unchanged from this morning’s opening rate.
Pound (GBP) Subdued as UK Political Paralysis Continues
The Pound (GBP) is muted this morning as GBP investors grow increasingly concerned by the UK’s political vacuum.
GBP exchange rates have stumbled in recent weeks amid the uncertainty of the Conservative leadership race.
GBP investors fear the UK’s current political paralysis could undermine efforts to tackle the cost-of-living crisis, as alarm bells sound over the UK’s economic outlook.
The Bank of England’s (BoE) latest economic forecasts made for bleak reading. The Pound nosedived last week as the bank warned the UK likely faces a prolonged recession and that inflation could climb as high as 13%.
Former prime minister Gordon Brown has warned the UK is faces a ‘financial timebomb’ this autumn. With Brown urging Conservative leadership rivals Liz Truss and Rishi Sunak along with current PM Boris Johnson to agree to an emergency budget.
However Downing Street has ruled out introducing any measures before the next Prime Minister is takes office on 5 September.
Norwegian Krone (NOK) Strength Undermined by Falling Oil Prices
The Norwegian Krone (NOK) has enjoyed solid support over the past month, climbing roughly three pence against the Pound.
However the Krone appears to have run out of steam this morning. A slump in crude prices knocking the appeal of the oil-sensitive currency.
The latest pullback in oil prices comes amid reports of last-minute talks to revive the 2015 Iran nuclear accord. The revival of the deal would allow Iran to resume crude exports.
Vivek Dhar, analyst at the Commonwealth Bank, said:
‘While the details around the timing of the resumption of Iran’s oil exports remain uncertain even if the accord is revived, there is certainly scope for Iran to increase oil exports relatively quickly.’
This comes as oil prices are already trading at a near five-month low. The outlook for oil markets is looking increasingly bearish amid rising recession fears.
Pound Norwegian Krone Exchange Rate Forecast: Rising Inflation to Bolster NOK?
The Pound Norwegian Krone (GBP/NOK) exchange rate could face renewed pressure on Wednesday with the publication of Norway’s consumer price index.
Another acceleration of inflation is likely to bolster expectations for Norges Bank’s next interest rate decision. Norway’s central bank is expected to hike rates back to their pre-pandemic levels next week.
Meanwhile, the Pound may struggle to find traction in the middle of this week in the continued absence of any notable UK data.
Sterling then looks poised to slump at the end of the week with the publication of the UK’s latest GDP figures. Recession fears are likely to flare if UK economic growth contracted in the second quarter as forecast.