The Pound Norwegian Krone exchange rate has been a strong performer so far in December, though the threat of a future slump remains ever present.
The Norwegian Krone, while losing ground against Sterling, has been a strong performer in other pairings. NOK demand has been aided by rising crude oil costs, though profit-taking has seen the currency move away from its highs.
GBP NOK Exchange Rate Advantage Continues after Davis Comments Turned Pound Bullish
While the Pound has largely trimmed Thursday’s gains, the GBP NOK exchange rate has still come in around 10.62.
This follows Thursday’s extraordinarily high GBP demand, which stemmed from hopes kindled by Brexit Secretary David Davis that the UK could pay to stay in the single market after leaving the EU.
Demand for the Norwegian Krone has since dropped off since Wednesday, when the currency was boosted by OPEC finally deciding to cut oil production in a bid to raise prices.
This sent Brent crude up from under $48 per barrel to almost $54, though NOK’s strength was quickly eroded by mass profit-taking.
Pound Sterling Performance Tied to UK’s Future Single Market Relationship
Although the Pound was sent skyrocketing on December 1st by proposals to pay for single market access, reactions to these plans could contribute to Sterling’s downfall in the future.
This is partially due to the viability of paying for single market access – if the costs are exceptionally high due to an abrasive EU attitude, the Government may opt to have limited access instead of full, which would diminish the UK’s trading capabilities.
The principle of paying for the market itself may also prove to be unpopular among UK citizens, given that some of the strongest arguments for leaving the EU were that less money (if any) would end up going to the continent.
Norwegian Krone Strength Dependent on Continued Oil Price Rise
The value of the Norwegian Krone has an extremely close link to the price of Brent crude oil, so continued increases in the area are likely to see the NOK advance against the Pound over the long-term.
Future influencers on the cost of the commodity are likely to include the US, which was not included in the OPEC discussions to cut the price of oil.
One popular theory is that as the US was not part of agreements to cut oil production, it could end up weakening oil prices in the future by overproducing in a bid to take advantage of presently high costs.
This would reproduce the low-oil prices issue for oil producers, in addition to weakening NOK demand due to falling costs of a key commodity.
Recent Interbank Exchange Rates
At the time of writing, the Pound Norwegian Krone (GBP NOK) exchange rate was trending in the region of 10.65 and the Norwegian Krone Pound (NOK GBP) exchange rate was trending in the region of 0.09.
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