Pound to Norwegian Krone Exchange Rate Down despite Weakness in Oil Prices
The Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate has been unable to avoid losses this week. It comes as the Norwegian Krone (NOK) saw strong performance this week despite mixed oil price news.
Following last week’s impressive jump from 11.71 to 11.90, GBP/NOK has shed most of those gains this week.
GBP/NOK briefly edged to a high of 11.98 at the beginning of this week. It was the best level for the pair since early July, over half a month ago.
After this though, the Norwegian Krone surged. Though the Norwegian Krone was unable to hold its best levels, GBP/NOK was still trending closer to the level of 11.80 on Friday, shedding around half of last week’s gains.
Pound (GBP) Exchange Rates Struggle despite Bank of England’s (BoE) Brighter Tone
This week’s biggest news was the Bank of England’s (BoE) August policy decision. Announced yesterday, the bank noted that the coronavirus pandemic had not impacted Britain’s economy as much as it had forecast this year.
It led to a brief surge in demand for the Pound yesterday.
However, Sterling was unable to sustain a solid recovery. While the news did boost hopes about Britain’s current economic performance, the bank maintained that the outlook was filled with challenges and concerns.
On top of this, the BoE indicated that negative interest rates were being considered, though still appeared hesitant to use them. According to Thu Lan Nguyen, Analyst at Commerzbank:
‘Even though the tool was officially still on the cards the debate in the monetary policy report suggests that the central bankers are not convinced of the positive effects and are therefore only likely to use this step as a very last resort’
Still, the possibility of the measure being taken in the future has definitely left more weight on the Pound outlook.
Norwegian Krone (NOK) Exchange Rates Dragged Down by Tumbling Oil Prices
Earlier in the week, the Norwegian Krone was boosted higher by oil prices and housing prices. Analysts noted that expectations for declines in oil supplies were helping boost the Krone to some of its best levels versus major rivals.
This is because the Krone is often correlated to prices in oil due to Norway’s oil trade.
Against the US Dollar (USD), the Norwegian Krone hit its best levels in 6 months. It saw a jump against Sterling as well.
The Norwegian Krone was unable to hold its best levels as oil prices started to tumble again. Concerns over the coronavirus pandemic, as well as flared US-China trade tensions, left oil prices weaker towards the end of the week.
The Krone’s appeal was also slightly dented by today’s Norwegian data. Norway’s June manufacturing and industrial production results were not quite as strong as forecast today.
Pound to Norwegian Krone (GBP/NOK) Exchange Rate Awaits Key UK Data
The past week’s Bank of England (BoE) news had a mixed impact on the Pound outlook. Resilience in the Norwegian Krone is keeping GBP/NOK from recovering too much.
As a result, investors are now looking ahead to major upcoming UK data, which could further influence the UK economic and Pound outlooks.
The biggest datasets on the way next week include Tuesday’s UK job market results, and Wednesday’s UK growth rate data.
The BoE has expressed concern about the health of UK jobs amid the coronavirus pandemic. The job market data could be especially vital to the Pound outlook.
As for the Norwegian Krone, it could continue to weaken if global oil and trade jitters intensify.
On the other hand, the Pound to Norwegian Krone (GBP/NOK) exchange rate could weaken further if oil prices show more signs of recovering.