GBP/NOK Exchange Rate Rangebound UK Retail Sales Fail to Benefit from Christmas Boost
The Pound Norwegian Krone (GBP/NOK) exchange rate held steady today, with the pairing currently trading around 11.588Kr as odds of a Bank of England (BoE) rate cut continue to rise after two of the bank’s policymakers said they would back a rate cut vote to stimulate the UK’s flagging economy.
Friday also saw December’s UK retail figures undershoot forecasts, which further increased the odds of a BOE rate cut as sales failed to benefit from a Christmas-boost.
Thomas Pugh, Economist at Capital Economics UK, commented
‘December’s outright fall in retail sales, despite a boost from the lateness of Black Friday, does not bode well for GDP growth in December and could nudge the MPC yet closer still to cutting rates at the end of the month’.
As a result, the Pound to Norwegian Krone exchange rate has remained unmoved today as UK markets remain cautious ahead of the 30 January rate decision.
Today saw the release of the UK Rightmove House Price Index for January, which rose by 2.3% in January, while the year-on-year figure increased to 2.7%.
Miles Shipside, a Director at Rightmove, was relatively optimistic about the housing market, commenting:
‘While there may well be more twists and turns to come in the Brexit saga, there is now an opportunity for sellers to get their property on the market for a spring move unaffected by Brexit deadlines.’
NOK/GBP Exchange Rate Rangebound, US-China Trade Deal Doubts Weigh on Norwegian Economy
The Norwegian Krone (NOK) failed to gain on the Pound (GBP) as market hopes in a US-China trade deal have slipped following last week’s signing of ‘phase one’ of the agreement. As a result, this has limited the market appeal of NOK as its economy relies heavily on steady foreign trade relations.
Weijan Shan, an Economist at PAG Group, Hong Kong, echoed concerns last week, saying:
‘Beyond the tariff-removal accomplishments, this ‘victory’ rings hollow for both sides. The deal from December does not mark a major breakthrough, nor does it come close to fixing the most contentious issues that separate the two countries.’
Today sees the Norwegian Krone once again driven by geopolitical developments due to a dearth of Norwegian economic data until Thursday this week.
The Norwegian Krone’s gains from increasing oil production – which hit a 9-year high on Friday – have failed to yield the NOK/GBP exchange rate any gains today. However, we could see the pairing edge higher as Norwegian markets begin to price in an improvement for the economy in the near-term.
GBP/NOK Outlook: November’s UK Unemployment Rate Figure in Focus
Sterling traders will be awaiting tomorrow’s publication of November’s ILO unemployment rate, which is expected to hold at 3.8%. Nevertheless, this is unlikely to provide the GBP/NOK much movement as BoE rate cut fears continue to hold back the Pound’s gains.
Norwegian Krone (NOK) traders will be paying close attention to US-China trade developments this week, with any further disturbance in relations between the two superpowers potentially weakening confidence in Norway’s trade-reliant economy.