Pound to Norwegian Krone Exchange Rate Recovery Limited Following Yesterday’s Strong Norwegian Job Report
While today’s key economic data from Norway fell well short of analyst forecasts, the Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate is still trending relatively closely to its worst levels following its Wednesday plunge.
Since opening this week at the level of 10.82, GBP/NOK has seen mixed movement.
The pair trended with an upside bias until yesterday, when a surprisingly strong Norwegian unemployment rate report knocked GBP/NOK to a low of 10.76 – which was also the pair’s worst level all year since November 2018.
Since then GBP/NOK has rebounded to nearer the level of 10.80 as investors buy the cheap Pound (GBP), but today’s weaker than expected Norwegian retail sales stats also helped the pair to recover.
Pound (GBP) Exchange Rates See Limited Recovery as No-Deal Brexit Fears Dominate
Yesterday afternoon, the Pound hit its worst levels all year against the Norwegian Krone, and hit multi-month lows against other major currencies as well.
The Pound hit those lows as fears built that a no-deal Brexit would become even more likely if Boris Johnson becomes Prime Minister, but investors bought the British currency up from those lows in profit taking.
Still, while the Pound has edged higher since hitting those lows yesterday, most of today’s gains have been due to weakness in the Norwegian Krone rather than any sturdy market demand for the British currency.
Investors remain hesitant to buy the Pound too much. Persisting no-deal Brexit fears dominate Britain’s political and economic outlooks, putting a cap on the Pound’s potential for gains.
Norwegian Krone (NOK) Exchange Rates Slide in Reaction to Underwhelming Retail Stats
The Norwegian Krone has been tumbling today, as investors react to the morning’s latest key Norway datasets.
Norway’s retail sales results showed shockingly deep contractions in May’s report. The monthly figure was expected to contract at -0.9%, but instead slumped to -1.3%. The yearly figure plunged from 1.7% to -2.2%.
While the previous figures were revised higher, the contractions in these stats and the morning’s household consumption figures weighed on the Norwegian Krone.
Still, the currency’s losses were relatively limited overall, and this was because investors remained impressed with yesterday’s impressive Norway unemployment rate report.
According to Erik Johannes Bruce, analyst at Nordea Markets, the retail data was more a correction than a concerning fall:
‘The drop in May retail sales is a correction after the very strong April figure and well in line with expectations. Despite the drop the trend so far this year points upwards after a weak second part of 2018. That is very much in line with both ours and Norges Bank’s view.’
Pound to Norwegian Krone (GBP/NOK) Exchange Rate Awaits Norwegian Unemployment Stats
While Wednesday’s Norwegian unemployment rate report was impressive, some analysts are unconvinced that it is enough to impact Norway’s economic outlook.
Erik Johannes Bruce from Nordea Markets said that tomorrow’s Norwegian unemployed persons data will be useful for judging whether unemployment is seeing a sustained improvement:
‘there is too much noise in LFS unemployment to take the monthly figures seriously. We will await tomorrow’s much more important June registered unemployment before we conclude whether the labour market seems to tighten faster than expected by Norges Bank.’
As a result, the Pound to Norwegian Krone (GBP/NOK) exchange rate could see a late-week shift if tomorrow’s Norway unemployed persons report surprises markets.
Friday will also see the publication of Britain’s latest growth and business investment stats.
However, unless these surprise enough to influence the Brexit-dominated economic outlook, the Pound to Norwegian Krone (GBP/NOK) exchange rate is more likely to be driven by UK politics and Norwegian data.