The Pound to Norwegian Krone exchange rate has slipped lower this week. The Pound lacks market appeal and the Krone has been supported by domestic data and rising prices of oil, Norway’s biggest commodity export.
GBP NOK plummeted from 10.71 to 10.43 last week. On Tuesday the pair hit a low of 10.39 – its worst level since March 2017.
Pound (GBP) Fails to Recover Amid Lack of Support
The Pound put in a limited recovery effort at the beginning of the week as investors bought it up from its cheapest levels. However, no gains were sustained and by Tuesday morning the Pound was trending near multi-month-lows against the Norwegian Krone.
Last week saw Sterling undermined by the latest UK ecostats, as well as fresh concerns that the Brexit process could end without any new UK-EU trade deal.
The Pound did see some limited support on Monday as hopes rose about the possibility of an ambitious trade deal between the UK and US.
While new trade talks cannot formally be held until Brexit takes place in 2019, hope that a UK-US trade deal could be reached quickly would improve long-term business and market confidence.
However, as UK Trade Minister Liam Fox indicated just last week that the Brexit process could end without a UK-EU trade deal, concerns about the Brexit process persist and weigh on Sterling’s strength.
The Pound could see a sturdier surge in demand on Wednesday if Britain’s Q2 Gross Domestic Product (GDP) projections beat expectations. Analysts predict quarter-on-quarter growth will improve slightly from 0.2% to 0.3%, but yearly growth will slow from 2% to 1.7%.
Higher than forecast growth data would bolster hopes that Britain’s economy is more resilient than expected. This would help Sterling to recover against the Krone towards the end of the week and improve the long-term Pound outlook too.
Norwegian Krone (NOK) Supported as Oil Prices Rise
The Norwegian Krone continued to advance against the Pound on Tuesday, supported by both global and domestic factors.
The biggest boost for the Krone this week has been the latest oil news, as oil producers from OPEC and non-OPEC member states held a meeting on where to proceed in stimulating oil prices.
While oil producers hesitated to indicate they could deepen the oil cuts, the current oil cut plan of 1.8m barrels per day could be extended beyond March 2018 if necessary.
As well as this, OPEC asked participating oil producers to step up compliance with the output cut plans. Saudi Arabian oil producers notably pledged to curb oil exports to the US in order to tackle the US’ oil supply glut.
Oil saw higher demand in response to the news, bolstering prices of the commodity and oil-correlated currencies like the Krone.
The Norwegian Krone was also supported by Norway’s Q2 industrial confidence report, which improved from 1.5 to 3.8.
Other key data due throughout the week, as well as oil price developments, could impact the Norwegian Krone outlook.
Thursday will see the publication of Norway’s May unemployment rate, followed by June retail sales on Friday. If these impress, NOK may be able to limit the Pound’s recovery attempts. However, poor oil price news or domestic data would help the GBP NOK exchange rate to recover more easily.
GBP NOK Interbank Rate
At the time of writing this article, the Pound to Norwegian Krone exchange rate trended in the region of 10.42. The Norwegian Krone to Pound exchange rate traded at around 0.0959.