Pound Norwegian Krone (GBP/NOK) Exchange Rate Strengthens on Northern Ireland Deal

Pound Norwegian Krone (GBP/NOK) Exchange Rate Rallies amid Northern Ireland Optimism

The Pound Norwegian Krone (GBP/NOK) exchange rate is rallying this morning, as investors continue to digest the ‘Windsor Framework’.

At the time of writing, GBP/NOK is trading around NOK12.5135, a rise of around 0.3% from this morning’s opening rates.

Pound (GBP) Continues Climb on ‘Windsor Framework’ Optimism

The Pound (GBP) is continuing its momentum this morning, with optimism over the Northern Ireland Protocol buoying Sterling.

Yesterday, UK Prime Minister Rishi Sunak announced the ‘Windsor Framework’, which ensures smooth trade. Furthermore, the deal ensures cooperation between the UK’s single market and the EU’s existing framework.

In an interview this morning, Sunak stated:

‘The framework is what we have agreed with the European Union. It’s an incredibly positive and comprehensive agreement, ensures that we have smooth flowing trade within the UK internal market.’

As such, further trade tensions between the UK and Europe may have been avoided, bringing cheer to GBP investors.

However, it remains to be seen whether or not the deal will pass through UK parliament. While it currently has the backing of Labour and many other parties, hardline Brexiteers may disagree with the deal. Similarly, the DUP is taking time to pore over the deal before coming to a decision.

Elsewhere, persistent Bank of England (BoE) rate hike bets could be adding further strength for Sterling this morning. A 25bps rate hike is now being priced in by markets for the next decision.

Norwegian Krone (NOK) Muted despite Rising Oil Prices

The Norwegian Krone is seeing muted trade this morning, despite a sharp uptick in oil prices. Due to the county’s reliance on oil exports, NOK usually trades in tandem with oil prices.

However, market sentiment towards the Kroner may be preventing the currency from consolidating any gains. NOK has been ranked as the worst-performing currency amongst G10 territories this year.

As such, investors are likely hesitant to support the Krone. Furthermore, the Krone remains the least liquid currency in the G10. As such, with a fluctuating market mood, investors may be unwilling to trade in NOK.

Pound Norwegian Krone (GBP/NOK) Exchange Rate Forecast: BoE Speeches in Focus

Looking ahead for the Pound, tomorrow sees a handful of data releases from the Bank of England (BoE). Consumer credit data for January is due to print in the morning, and is forecast to have increased to £.08bn.

This increase could weigh on Sterling, by reflecting the need for UK households to rely on financing during the cost-of-living crisis.

After this, BoE Governor Andrew Bailey is due to deliver a speech. If he strikes a hawkish attitude towards inflation, Sterling could strengthen.

For the Norwegian Kroner, tomorrow brings the release of the DNB manufacturing PMI. February’s index is forecast to show a contraction in the sector, which could weigh heavily on NOK exchange rates.

Elsewhere, oil price fluctuations may lend support to the Norwegian Kroner. Due to NOK’s links to oil prices, a continued rise could boost the currency.

John Mulcahey

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