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Pound Norwegian Krone (GBP/NOK) Exchange Rate Falls as Middle East Tensions Spark Surge in Oil Prices

Oil Price

Pound Sterling Norwegian Krone (GBP/NOK) Exchange Rate Slumps as Oil Prices Jump 20%

The Pound Sterling Norwegian Krone (GBP/NOK) exchange rate slumped and the pairing is currently trading at around 11.1729Kr.

Disruption to global oil supplies after Saturday’s attack on Saudi Arabian oil refining facilities caused safe-havens and currencies of oil-producing countries such as the Norwegian Krone to rise.

The Krone moved with the surge in oil prices, which jumped 20%.

Commenting on this, head of research at brokerage Pepperstone Group, Chris Weston said:

‘The natural flow through of higher [oil] prices has seen the NOK and the CAD outperform’

This was the largest increase in oil prices since 1991 and the US blamed Iran for the attacks.

Risk-appetite decreased as US President Donald Trump stated Washington was ‘locked and loaded’ to retaliate.

Denying blame for the attacks, Iran stated it was ready for ‘full-fledged war’.

Sterling (GBP) Falls as PM ‘Cautiously’ Optimistic About Brexit Discussions

Prime Minister Boris Johnson has stated he is ‘cautiously’ optimistic about progress in Brexit discussions as he meets European Union leaders.

However, Downing Street has stated the Prime Minister is not willing to extend Article 50 beyond the 31 October deadline.

The anonymous source stated:

‘Any further extension would be a huge mistake. It is not just a question of the extra dither and delay – it is also the additional long months of rancour and division, and all at huge expense.

‘This is why the PM will stress to Mr Juncker that, while he wants to secure a deal, if no deal can be agreed by October 18 his policy is to leave without a deal on October 31 – and reject any delay offered by the EU.’

Sterling remained under pressure as over the weekend, rhetoric emerged from both sides suggesting their positions on Brexit remain far apart.

Commenting on this, Thu Lan Nguyen, Commerzbank currency strategist noted:

‘The fact remains there is still a decent chance of Britain not being able to secure a deal and that is prompting investors to take profits after last week’s rally.’

Pound Norwegian Krone Outlook: Will a Hawkish Norges Bank Buoy NOK?

Looking ahead, it is likely the Pound (GBP) will remain under pressure ahead of Wednesday’s Brexit debate in European Parliament.

Sterling is likely to slide further if the positions of the UK and EU continue to remain far apart, which will likely cause investors to price in the chance of a no-deal.

Meanwhile, the Norwegian Krone (NOK) could continue to edge up against GBP ahead of Thursday’s Norges Bank interest rate decision.

While the Bank is expected to leave rates unchanged, if the central bank is overly hawkish the Pound Norwegian Krone (GBP/NOK) exchange rate could slump.