June 1, 2017 - Written by James Fuller
STORY LINK GBP NOK Exchange Rate Trades Tightly after Election Polls Show Falling Conservative Lead
Over the current week, the Pound has steadily risen against the Krone, climbing from a starting rate of 10.7429 to a high of 10.9029 on Wednesday. Since this peak, however, the Pound has dropped off, trading around 10.8612 today.
This recent slide follows an opinion poll that put the Conservatives just 3 percentage points ahead of Labour. The poll came out after a BBC leader’s debate, where PM Theresa May was notably absent.
Fellow party leaders and representatives criticised May’s no-show, which the PM explained was due to her focusing on possible Brexit deals. This apparent blind dedication to one aspect of the Conservative manifesto may have diminished confidence in the Prime Minister, which would account for another narrowing in the polls.
Traders broadly consider a Conservative landslide victory as the best outcome for the UK, so the GBP NOK exchange rate could depreciate further if pre-election polls show further drops in Conservative support.
The next direct UK data will be Friday’s construction PMI for May. This measure of national construction activity is forecast to show a slowdown, from 53.1 to 52.7. While minor, this result would put construction activity closer to the contraction range of sub-50 points. With slower growth, there could be Pound-weakening fears about a housing market undersupply.
Norwegian Krone movement over the week has been most strongly dictated by Brent crude oil costs. Krone to Pound losses have been seen since a recent OPEC meeting, where crude oil producers failed to expand their current production cut program, only extending it instead.
Brent crude costs accordingly dipped on fears of market oversupply, having fallen close to $50.50 per barrel today. As well as the OPEC upset, Brent crude costs have remained low after news that near-term Libyan oil production could be picking up.
Commenting on the problems facing the oil industry was Commerzbank Commodity Analyst Carsten Fritsch;
‘Unless some bullish news stops this, prices will fall further, in particular now with Brent trading below the post-OPEC low’.
Norwegian domestic data has also disappointed Krone traders; monthly retail sales in April rose by 0.2%, but annual sales fell from 2.7% to 2.2%. Additionally, the NMA manufacturing measure showed a larger-than-expected drop in activity, from 54.6 to 54.3.
The last Norwegian economic data of the week will be Friday’s unemployed persons count for May. This is predicted to show a minor dip, from 97.46k to 96.8k. The data is considered low-impact, so the Krone could remain unmoved unless there is a significant improvement in oil prices.
The Krone could appreciate today if US crude oil stock data shows a shortage of the resource. News of falling supplies could drive up prices for global crude oil reserves, which would benefit Norwegian exporters and by extension the national economy.
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TAGS: Norwegian Krone Forecasts Pound Sterling Forecasts