February 16, 2017 - Written by Ben Hughes
STORY LINK GBP to NOK Exchange Rate Falls Despite Oil Market Concerns
The British Pound to Norwegian Krone exchange rate edged higher on Friday afternoon as prices of oil, Norway’s most lucrative commodity, slipped due to persistently high oil stocks in the US.
Despite its Friday gains, the GBP/NOK exchange rate remains well below the week’s opening levels. However, the pair could continue to advance next week if UK growth results due on Wednesday impress traders.
[Previously updated 11:00 GMT 17/02/2017]
With oil prices trending in a narrow range on Friday morning the Norwegian Krone has found little particular support.
However, the Pound to Krone exchange rate remained on a downtrend in response to unexpectedly weak UK retail sales, which point towards a greater negative impact from the Pound’s post-referendum softness.
[Previously updated 16/02/2017]
The British Pound to Norwegian Krone exchange rate slumped to below the week’s opening levels on Wednesday as UK wage data disappointed GBP traders. The Norwegian Krone has held most of its gains as oil prices are sturdy despite a surge in oil stocks.
GBP/NOK began the week trending at the level of 10.4494. Since rising to a February high of 10.5138 on Tuesday, the pair has fallen to a weekly low of 10.3772.
GBP Recovery Limited on Disappointing Local Stats
The Pound edged higher against the Norwegian Krone on Thursday, emerging slightly from its worst weekly levels amid a lack of fresh local data.
However, after this week’s disappointing UK ecostats, investors have seen little reason to buy into the Pound.
According to this week’s UK employment results from the three months through December 2016, UK wage growth slowed to 2.6% in both bonus and non-bonus prints. They were expected to hold at 2.8% and 2.7% respectively.
The rest of the job figures were solid, but this - coupled with surging inflation in 2017 - increased market fears that Britain’s retail sector could suffer if consumers are financially squeezed in the year ahead.
This week’s UK Consumer Price Index (CPI) figures jumped to 1.8%, but as it didn’t reach 1.9% as projected analysts perceive there isn’t much hope of the Bank of England (BoE)
tightening UK monetary policy any time soon.
NOK Strength Limited by Mixed Oil News
The Norwegian Krone easily advanced against the Pound on Wednesday due to broad Sterling weakness. However, its strength was limited on Thursday as oil market concerns began to outweigh oil market optimism.
While prices of oil have remained sturdy this week, US oil inventories have soared. This is despite OPEC’s efforts to stimulate oil demand by cutting oil production.
This week, the Energy Information Administration (EIA) announced that oil inventories in the US had reached a record high of 518.1 million barrels.
While compliance for the OPEC (and participating non-members) production cut plans are over 90%, concern is mounting that it will not be enough to stimulate oil prices in the long-term.
As a result, the Norwegian Krone fell from its highs on Thursday and allowed the Pound to recover slightly.
GBP/NOK Forecast: UK Retail Sales in Focus
The Pound is likely to drive GBP/NOK exchange rate movement again towards the end of the week, as Britain’s January retail sales results will be published.
These results will round of this week’s UK economic calendar quite nicely. UK inflation stats indicated the BoE would not hike UK rates any time soon and job data indicated that inflation would outpace wage growth in 2017.
If retail sales come in worse-than-predicted in 2017, it will confirm investor fears that UK consumer spending will likely plunge throughout the year.
As the consumer financial sectors of Britain are among its most important for growth, worsening retail activity throughout the year could cause UK growth to slow considerably.
Even if oil prices fall on Friday, the Pound to Norwegian Krone exchange rate will fall if the day’s UK retail sales results fail to meet expectations.
On the other hand, UK economic concerns may subside if retail sales beat expectations and allow GBP/NOK to recover to the week’s opening levels.
International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.
TAGS: Norwegian Krone Forecasts