Pound Norwegian Krone (GBP/NOK) Exchange Rate Edges up as Boris Johnson Wins Tory Leadership Election
UPDATE: The Pound Sterling Norwegian Krone (GBP/NOK) exchange rate rose and the pairing is currently trading at an inter-bank rate of 10.7927kr.
On Tuesday it was announced that Boris Johnson won the Conservative Party leadership contest and will become the UK’s next Prime Minister.
Johnson gained around 66% of the vote, winning 92,153 votes compared to Jeremy Hunt’s 46,656 votes.
Despite fears Johnson’s win could prompt Sterling to slump, the Pound continued to rise against the Norwegian Krone.
Pound Norwegian Krone (GBP/NOK) Exchange Rate Rises despite BoE Saunders’ Dovish Comments
The Pound Sterling Norwegian Krone (GBP/NOK) exchange rate rose by around 0.4%.
The pairing is currently trading at an inter-bank rate of 10.7930kr.
On Tuesday morning, Sterling rose against the Norwegian Krone despite comments from Bank of England (BoE) policymaker, Michael Saunders.
The usually hawkish Saunders surprised markets with his unexpected dovish tone and emphasised the weakness of the UK economy.
Speaking to Bloomberg, Saunders warned that it was unclear whether the UK would leave the EU smoothly, and noted:
‘The economy right now is clearly not overheating – the underlying pace of growth, stripping out all of the funny effects, inventories, car shutdowns and so forth, is weak and below trend.’
Added to this, many investors believe the BoE will slash rates in the event of a no-deal, however Saunders stated:
‘It’s hard to know how it would play out with any certainty […] I wouldn’t want to give a strong steer now as to which way policy would go.’
Sterling (GBP) Left Flat as Markets Await Announcement of New Conservative Party Leader
Meanwhile, the Pound remained under pressure against a handful of currencies as markets awaited the result of the Conservative Party leadership contest.
Either Boris Johnson of Jeremy Hunt will become the new leader of the Tory party on Tuesday, and officially become Prime Minister on Wednesday.
Frontrunner Boris Johnson is seen as the favourite, however many Cabinet Ministers have said they would not serve under him.
However, Sterling rose despite fears Johnson will take office and trigger a hard no-deal Brexit.
Commenting on this, Takuya Kanda, General Manager of Research at Gaitame.com Research Institute noted:
‘Johnson is expected to become the new Prime Minister, so there is a real chance of a hard Brexit.
‘In the short-term, further declines in the Pound could be limited because positions are already very short. In the medium term, sentiment for Sterling will remain soft.’
Weaker than Forecast Industrial Confidence Leaves Norwegian Krone (NOK) Under Pressure
On Tuesday morning, data revealed that Norwegian industrial confidence rose by a lower-than-expected 5.6 during the second quarter.
This came after a revised reading of 6.8 during the first three months of 2019.
Disappointing industrial confidence left the Norwegian Krone under pressure, causing it to slide against GBP despite Brexit pessimism looming over Sterling.
Pound Norwegian Krone Outlook: Will Disappointing Norwegian Unemployment Weigh on NOK?
Looking ahead to this afternoon, it is likely the Pound (GBP) will slump against the Norwegian Krone (NOK) as the new leader of the Conservative Party is announced.
If frontrunner, Boris Johnson is announced as the winner the risk of a hard, no-deal Brexit could increase and send Sterling lower.
Meanwhile, on Thursday the Norwegian Krone could slump against the Pound following the release of the labour force survey.
If data reveals there is a lack of expansion in the Norwegian economy, it could cause the Pound Norwegian Krone (GBP/NOK) exchange rate to rise.