March 9, 2017 - Written by Frank Davies
STORY LINK GBP NOK Exchange Rate Jumps as Oil Prices Plummet
The British Pound to Norwegian Krone exchange rate looked to end the week well above its opening levels despite broad weakness in the Pound as the Krone remained weak on disappointing oil news.
Despite continued oil production cuts from OPEC and other collaborating oil producers, oil stocks remain high and the commodity’s prices are struggling to stay buoyed.
[Previously updated on 10/03/2017]
On Friday morning the GBP NOK exchange rate was trending narrowly at 10.4410, its previous momentum faltering as oil prices recovered somewhat.
The appeal of the Krone improved after the domestic inflation rate was found to have fallen back to 2.5% in February, returning to the Norges Bank’s target level and boding well for the outlook of the wider economy.
[Previously updated 09/03/2017]
The Pound Norwegian Krone (GBP NOK) exchange rate rocketed higher yesterday evening as oil following a sudden drop in oil prices.
Pound Norwegian Krone (GBP NOK) Rises as Oil Prices Tumble
The Norwegian Krone found itself on the back foot against the Pound yesterday as it was weakened by a sharp downturn in oil prices.
With crude accounting for around 30% of Norway’s exports the Krone is tied very closely to the oil market.
Crude fell over 5%, its worse single day loss in a year on Wednesday as markets reacted to a large surge in US stockpiles.
US surplus rose dramatically from 1.5m to 8.2m barrels in the latest tally of inventories, this significantly outpaced forecasts that stocks would rise to 1.9m barrels.
The increase in US inventories prompted prices to slide to $50.28 a barrel, leaving crude dangerously close to falling below the $50 marker, with analysts predicting that it is indeed headed in that direction.
Andrew Lebow, senior partner at Commodity Research Group in Darien, Connecticut said;
‘We're seeing some 'GMO trading', or 'Get-Me-Out' type trading, it's a combination of an overhang of (speculative) length and the overhang in inventories ... and the other thing unnerving the market is rapid growth in U.S. crude production.’
The slump in prices has also undone most of the work by the Organization of the Petroleum Exporting Countries (OPEC) to raise prices this year after the group agreed to cut production levels at the start of the year.
Spring Budget Improves Sterling Sentiment
The Pound’s advance was also supported yesterday by the release of Philip Hammond’s Spring Budget as the Chancellor presented an upbeat outlook for the coming year.
While Hammond’s statement did not include a dramatic increase in government spending or surprise tax reforms as some analysts had predicted, it was not enough to detract from some of the positives of the Budget.
Markets were particularly optimistic following the upward revision of the Office for Budget Responsibility’s (OBR) 2017 GDP forecasts from 1.4% to 2.0%.
The Chancellor also announced that the government would be investing around £300million to put the UK at the forefront of emerging technologies such as driverless cars and to prepare the country for the introduction of a 5G mobile data service, which will hopefully make investing in the UK more attractive to companies.
GBP NOK Exchange Rate Forecast: UK Trade Balance Ahead
The Pound could cede some of its recent gains tomorrow morning with the release of the UK’s latest Balance of Trade, with analysts predicting that Britain’s trade deficit will have grown at the start of the year.
Sterling is also likely to suffer from an expected fall in Production across the Manufacturing, Industrial and Construction sectors after figures normalise after an unusually strong performance at the end of 2016.
Meanwhile the Norwegian Krone may recoup some of its losses as the domestic inflation rate is forecast to recover from a slight contraction at the start of the year.
At the time of writing the GBP NOK exchange rate was trending around 10.42 and the NOK GBP exchange rate was trending around 0.09.
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TAGS: Currency Predictions Pound Norwegian Krone Forecasts