Pound to Norwegian Krone Exchange Rate Climbing despite Lack of Sterling Support
As the global coronavirus pandemic outlook worsens, the Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate continues to rise. This is due largely to the Norwegian Krone’s (NOK) correlation with market trade sentiment, which has been hit hard in recent weeks.
Following last week’s advance from the level of 11.56 to 11.74, GBP/NOK has already seen even stronger gains this week.
GBP/NOK has now recovered all of September’s losses and advanced even higher. At the time of writing on Wednesday, GBP/NOK trended near a high of 11.98. This was the best level for GBP/NOK in almost three months, since the 26th of June.
Pound (GBP) investors are now awaiting more UK coronavirus developments. Meanwhile, Norwegian Krone investors await tomorrow’s Norges Bank policy decision.
Pound (GBP) Exchange Rates Firm despite Disappointing PMIs
Following a Pound slump earlier in the week in reaction to Britain’s worsening coronavirus situation, the British currency is steadying slightly today.
This is more due to rival weakness though, as the latest UK news and data has not been particularly supportive.
Britain’s outlook was hit significantly by coronavirus second wave fears this week. The UK government yesterday announced fresh restrictions on UK activity in order to prevent the virus spread.
This was followed today by some underwhelming UK PMI data. Britain’s key services PMI slowed to 55.1, rather than the expected 56.0.
Charles Hepworth, Investment Director at GAM Investments, even said that Britain’s PMIs are only likely to deteriorate further:
‘Further restrictions imposed by Prime Minister Boris Johnson yesterday will likely see a similar trajectory as the Eurozone going forward as we expect to peak temporarily in the PMI numbers in the UK.’
Norwegian Krone (NOK) Exchange Rates Pressured Further by Market Trade-Aversion
Investors continued to sell the Norwegian Krone ahead of tomorrow’s anticipated Norges Bank policy decision.
The Norwegian Krone has been broadly unappealing in recent weeks. This has largely been due to weakness in prices of oil, a major export for Norway.
Oil prices have been tumbling in reaction to a global surge in coronavirus cases. The coronavirus second wave has left investors rushing into safe havens, which has caused losses in commodities and other assets correlated to risk and trade.
Norwegian Krone losses have been among the primary causes of impressive GBP/NOK gains this week.
Pound to Norwegian Krone (GBP/NOK) Exchange Rate Awaits Norges Bank Outlook
For most of the week so far, European coronavirus developments have driven the Pound to Norwegian Krone exchange rate.
This is likely to continue for the remainder of the week, as few notable UK ecostats are due for publication.
Any fresh signs that Britain could see even stricter coronavirus restrictions could further limit the Pound’s advances.
However they could also mean more losses for the Norwegian Krone. Market aversion to risk and commodities will leave the Krone with less support.
Of course, Norwegian Krone investors will also be anticipating tomorrow’s Norges Bank policy decision.
No big shifts in policy are expected from the bank. Instead, the bank’s tone regarding the global coronavirus pandemic and its impact on Norway will be the focus.
If the Norges Bank is more dovish than expected, the Pound to Norwegian Krone (GBP/NOK) exchange rate could keep rising despite a lack of Pound support.
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