GBP/NOK Exchange Rate Falls as Norway’s Economic Outlook Improves
The Pound to Norwegian Krone (GBP/NOK) exchange rate fell by -0.5% today, with the pairing currently fluctuating around 12.01kr.
The Norwegian Krone (NOK) rose today after Norges Bank held its interest rates at 0%.
As a result, NOK has risen on what was generally a more bullish-than-expected forecasts from the Norges Bank, which highlighted the fact that Norway’s economy was on a slow road to recovery.
Norway’s central bank’s statement said:
‘Underlying inflation has fallen, but is still higher than the inflation target. The effects of the krone depreciation earlier in 2020 are gradually fading. Together with prospects for low wage growth, this suggests that underlying inflation will moderate in the coming years.’
Meanwhile, NOK traders are becoming more jittery as Norway prepares new restrictions to curb the spread of the coronavirus.
Health Minister Bent Hoeie commented:
‘We can’t wait and see if the measures we announced last week are enough. That is why the government will introduce additional restrictions this week. We have to take precautions.’
Pound (GBP) Falls as Outlook for UK’s Economy Grows Dark as Nation Enters Lockdown
The Pound (GBP) fell today after the Bank of England (BoE) held interest rates at 0.1%, relieving some fears of a negative interest rate which was previously hinted at by several policymakers.
However, the Bank was generally dovish about the outlook for the British economy. The BoE said in its statement:
‘Over the remainder of the forecast period, GDP is projected to recover further as the direct impact of Covid on the economy is assumed to wane. Activity is also supported by the substantial fiscal policies already announced and accommodative monetary policy.
‘The recovery takes time, however, and the risks around the GDP projection are judged to be skewed to the downside.’
As a result, GBP investors are remaining cautious as the nation enters its second national lockdown and Brexit developments remain largely uncertain.
In other UK economic news, today saw the release of the latest Construction PMI for October, which fell below forecasts from 56.8 to 53.1.
Duncan Brock, the Group Director at the Chartered Institute of Procurement & Supply, commented:
‘Activity growth in the construction sector dipped a little in October as supply chain challenges impacted on productivity, and some of the momentum from the last few months leaked away.’
GBP/NOK Forecast: Could Strong Norwegian Manufacturing Output Boost NOK?
Norwegian Krone (NOK) investors will be looking ahead to tomorrow’s release of September’s Norwegian Manufacturing Output.
Any improvement in Norway’s economic outlook would prove NOK-positive.
Meanwhile, Sterling traders will be awaiting further updates on the UK-EU Brexit situation.
If talks between the two sides show signs of progress towards a post-Brexit trade agreement, then the GBP/NOK exchange rate could edge higher.