GBP/NOK Exchange Rate Falls, Downing Street Threatens to Walk Away from UK-EU Trade Talks
The Pound Norwegian Krone (GBP/NOK) exchange rate fell by -0.3% today, with the pairing currently fluctuating around 12.089kr after the British Government said that unless it was granted a Canadian-style trade deal from the EU, it would consider walking away from June’s trade talks.
Downing Street said in its outline of negotiations with the EU, that it would ‘need to decide whether the UK’s attention should move away from negotiations and focus solely on continuing domestic preparations to exit the transition period in an orderly fashion.’
Sterling weakened against the Norwegian Krone (NOK) on rising fears of a no-deal Brexit by the end of the transition period, which ends in late December this year.
Cabinet Office Minister Michael Gove commented:
‘We want the best possible trading relationship with the EU. We will not accept nor agree to any obligations where our laws are aligned with the EU or the EU’s institutions, including the Court of Justice.’
The GBP/NOK exchange rate has also remained subdued following news of further coronavirus cases in the UK.
Neil Jones, an analyst at Mizuho Bank, also highlighted the possibility that March’s Budget could be delay due to global market uncertainty:
‘My sense is the market is pulling back on [the Pound] long positions originally destined to run into an upbeat expansionary fiscal stance in next month’s budget. However, latest reports suggest measures may well be delayed into the autumn.’
NOK/GBP Exchange Rate Rises on Positive Norwegian Retail Sales
The Norwegian Krone (NOK) edged higher against the weaker Pound (GBP) today after January’s Norwegian retail sales rose by 0.5%, boosting the economic outlook for Norway’s economy going forward.
Ned David Research was also gloomy about oil prices:
‘The oil market is looking down the barrel at no demand growth for the calendar year, and outright demand contraction is now on the table.’
With Norway’s economy being significantly oil-reliant, this has left many Norwegian Krone investors feeling jittery as this could weaken the economy in the near-term.
GBP/NOK Outlook: Could Sterling Rise on Improving UK Consumer Sentiment?
Norwegian Krone (NOK) investors will be looking ahead to tomorrow’s Norwegian registered unemployment report for February. Any signs of improvement in Norway’s job data would prove NOK-positive.
Sterling traders, meanwhile, will be awaiting February’s UK GfK consumer confidence report. If the UK economic outlook brightens this month, we could see the GBP/NOK exchange rate claw back some of its losses.
Coronavirus developments will continue to dictate the direction of the GBP/NOK exchange rate. Any further signs of spreading likely weakening oil prices and negatively impacting the Norwegian currency.