January 18, 2017 - Written by John Cameron
STORY LINK British Pound to Norwegian Krone Exchange Rate Falls from Highs after Tuesday Surge
The British Pound to Norwegian Krone exchange rate edged higher on Thursday afternoon, as Sterling sentiment remained solid thanks to higher hopes for post-Brexit Britain to make new strong trade deals.
This was despite news that prices of oil, Norway’s most lucrative commodity, had increased on Thursday due to falling US oil stockpiles and increased evidence of OPEC producer cuts.
[Previously updated 19/01/2017]
With the initial bullish impact of Theresa May’s Brexit speech having faded the Pound to Norwegian Krone exchange rate was prompted to trend narrowly on Thursday morning.
As oil prices floundered once again there was only limited support for the Krone, particularly as market risk appetite remains volatile ahead of the US inauguration.
[Previously updated 18/01/2017]
The Pound to Norwegian Krone exchange rate fell on Wednesday after hitting a high of 10.4922 on Tuesday – its best level in almost two weeks. Sterling was sold from its highs in profit-taking but sentiment remained strong.
GBP NOK began the week at the level of 10.3512 and fell to a two-week-low of 10.2241 on Tuesday. The pair remained above the week’s opening levels at the time of writing.
Pound (GBP) Slips Back after Highly Bullish Tuesday
Some investors decided to sell the British Pound on Wednesday and others readjusted their positions, causing GBP/NOK to fall over -0.5% by the middle of the day.
The Pound had previously put in a highly strong performance on Tuesday in reaction to a confident Brexit speech from UK Prime Minister Theresa May.
The most vital point of the speech was the reconfirmation that UK Parliament would be given a vote on the final Brexit deal before it becomes UK law. May also confirmed that the UK would sooner accept no deal than a bad deal, adding to hopes that UK-EU trade links could still be strong in post-Brexit Britain.
Sterling rallied across the board following the speech, and the Pound to Norwegian Krone exchange rate leapt by around 200 pips.
Norwegian Krone (NOK) Advances Versus Pound Despite Oil Price Slips
Concerns over the continued market performance of oil, Norway’s most lucrative commodity, have increased this week amid concerns that production of oil in the US is likely to increase in the coming months.
With OPEC member nations and some non-members cutting production in attempt to boost demand and prices for oil, US oil production is speculated to be starting up again in order to fill that gap.
Though the Norwegian Krone was weighed down by oil price concerns, Sterling’s influential drops on Wednesday allowed the Krone to advance.
GBP/NOK Forecast: Will Pound Confidence Remain?
Many analysts and economists perceive that market sentiment on the Pound improved significantly on Tuesday following UK Prime Minister Theresa May’s Brexit speech.
Long-term hopes that the UK economy and the Pound will perform decently outside of the EU are among the main reasons for this week’s Pound strength.
However, this long-term outlook also has the potential to change depending on the early days of Brexit negotiations. The Brexit process is on track to begin proper in March 2017, at which time investors will be closely eyeing the success of negotiations.
If negotiations appear to take a bad turn for Britain’s trade prospects, the Pound (and its long-term outlook) could plunge.
In the shorter term, Sterling may be able to hold much of this week’s gains if Friday’s December UK retail sales results impress traders. They are currently predicted to improve from 5.9% to 7.2% year-on-year.
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TAGS: Currency Predictions Norwegian Krone Forecasts