GBP/NOK Exchange Rate Edges Higher as Norway’s Economic Outlook Darkens
The Pound to Norwegian Krone (GBP/NOK) exchange rate rose by 0.5% today, with the pairing currently trading around 12.271kr.
The Norwegian Krone (NOK) fell today after August’s Norwegian Retail Sales gauge fell below forecasts from 0.6% to -4.9%.
As a result, NOK has suffered from an increasingly dim outlook for the Norwegian economy.
Statistics Norway said in its Economic Survey for 2020 that Norway’s economic recovery had continued after its historical contraction.
The Norwegian statistics bureau said in the report:
‘[T]he recovery of the Norwegian economy will continue, but the after-effects of the infection control measures and the decline in the global economy will probably result in the Norwegian economy remaining in a cyclical downturn for several years. However, future developments are shrouded in uncertainty, and a new wave of infection could place a further damper on economic activity.’
Meanwhile, Norwegian Krone (NOK) traders will be paying close attention to global economic developments.
If rising Covid-19 cases threaten to derail global economic recovery, then the trade-reliant Norwegian economy could suffer along with NOK.
Pound (GBP) Edges Higher as Hopes of a Last Minute Brexit Deal Boost UK Markets
The Pound (GBP) rose today as hopes of Brexit trade deal have returned with the UK and the EU set to resume trade talks tomorrow. As a result, Sterling traders are hopeful of a last-minute post-Brexit trade deal.
Mohit Kumar, an analyst at Jeffries, was also optimistic, saying:
‘We are hopeful that a last minute deal would be reached, but the negotiations have become complicated following the recent UK Internal Markets bill, which is likely in breach of international law.’
Today also reports that a second Covid-19 wave could knockout the UK high street, leaving many GBP investors concerned for the British economy throughout the autumn and winter months.
An IWG spokesperson explained:
‘The Covid-19 pandemic is a black swan event and it has severely impacted our business and presented us with unforeseen challenges.’
The Bank of England (BoE) has also hinted that it could be considering taking interest rates into negative territory.
Silvana Tenreyro, a BoE rate-setter, said that evidence for negative interest rates bolstering the British economy had been ‘encouraging’.
GBP/NOK Forecast: Could Returning Brexit Trade Deal Hopes Boost Sterling Throughout This Week?
Pound (GBP) traders will be looking ahead to tomorrow’s release of August’s UK Mortgage Approvals. Any marked improvement in the data would prove GBP-positive.
Tomorrow will also see a speech by Andrew Bailey, the Bank of England’s (BoE) Governor. As a result, we could see Sterling fall if he hints that the bank could take interest rates into negative territory.
Norwegian Krone (NOK) investors will be eyeing global economic developments. If the global economy continues to slow, then NOK would suffer as the outlook for the Norwegian economy dims.
The GBP/NOK exchange rate could continue to head higher this week if hopes of a post-Brexit trade deal return.