GBP/NOK Exchange Rate Claws Back Last Week’s Losses
Despite the discovery of a new more infectious coronavirus strain, the Pound to Norwegian Krone (GBP/NOK) exchange rate has been rebounding today. The oil-correlated Norwegian Krone (NOK) is struggling to avoid losses as oil prices fall.
After opening this week at the level of 11.60, GBP/NOK has seen highly volatile movement. The pair briefly dipped as low as 11.53 at the beginning of the week, its worst level all year, but has since attempted to rebound.
At the time of writing, GBP/NOK is trending near the level of 11.67. This means it has essentially recovered last week’s losses – for now at least.
There is certainly potential for more Pound (GBP) weakness in the outlook, especially if the coronavirus situation worsens, or if no Brexit deal is agreed soon.
Pound (GBP) Exchange Rates Rebounding but Downside Risks are Considerable
The Pound is rebounding from its worst levels. This is due largely to hopes that existing coronavirus vaccines will be able to handle the new strain, as well as some stronger than expected UK growth data.
However, uncertainty still dominates the Pound outlook.
Not only is there concern that there could be a new nationwide UK lockdown in the New Year, but the threat of a no-deal Brexit is significant.
With just over a week until the end of the Brexit transition period, Britain could be about to see a cliff-edge scenario.
Norwegian Krone (NOK) Exchange Rates Fall from Highs as Oil Prices Weaken
The Norwegian Krone’s recent strong streak has come to an end, as markets become more anxious about the coronavirus pandemic again.
After a period of strong gains on coronavirus vaccine hopes, reports of a new more infectious strain have caused market panic. This is causing commodities like oil to weaken, as well as currencies correlated to those commodities.
Oil trade is important to Norway’s economy, so the Norwegian Krone has been less appealing as oil prices tumble.
Norway’s October unemployment rate remained at 5.2% according to today’s report. This met expectations and had little impact on NOK movement.
Pound to Norwegian Krone (GBP/NOK) Exchange Rate Outlook Remains Limited
While the Pound to Norwegian Krone exchange rate is rebounding from its worst levels today, the pair’s potential for gains is still highly limited.
Sterling is steadying on hopes for the new coronavirus strain to come under control, but there is still a high chance that stricter measures may be implemented to accomplish this.
New lockdown measures are likely to keep the Pound unappealing.
On top of this, if coronavirus vaccine hopes rise again, this will also boost the appeal of commodities. This could boost oil and the Norwegian Krone again.
If the Norwegian Krone is resilient, the Pound will have even less chance of recovery. Brexit concerns continue to dominate the Pound outlook as well, as there is just over a week until the end of the Brexit transition period.
Without a Brexit deal, and with the UK coronavirus situation possibly worsening, the Pound to Norwegian Krone exchange rate outlook is gloomy.
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