Rebounding Oil Prices Send the Pound Norwegian Krone (GBP/NOK) Exchange Rate Lower

April 23, 2020 - Written by John Cameron

STORY LINK Rebounding Oil Prices Send the Pound Norwegian Krone (GBP/NOK) Exchange Rate Lower

Pound Sterling Norwegian Krone (GBP/NOK) Exchange Rate Plummets as Oil Prices Rebound

The Pound Sterling Norwegian Krone (GBP/NOK) exchange rate plummeted on Thursday morning, falling by around -0.8%. This left the pairing trading at around 13.1808Kr.

The Norwegian Krone made significant gains against the Pound today after oil prices rose after an unprecedented collapse. The rebound in prices and increase in oil futures helped to calm markets and boosted the Krone.

The increase in oil prices was also spurred by the rising tensions in the Middle East and huge output cuts designed to help the oversaturated oil market.

This week has seen oil prices suffer the most chaotic week ever, after the expiring US contract CLc1 pushing prices into negative territory for the first time ever. While Brent has seen its value fall by around two-thirds so far in 2020.

The recent rally in prices followed US President Donald Trump’s announcement that he had instructed the US Navy to fire on any Iranian ships that harass it in the Gulf.

According to ING’s head of commodities strategy Warren Patterson:

‘This ratchets up tensions once again between the U.S. and Iran. However, given the glut we have in the oil market, it is difficult to see this offering lasting support to the market, unless the situation does escalate further.’

The Krone was also offered support after the country’s unemployment rate fell to 3.5% in the three months to March, down from 3.9% in the October to December period.

Sterling (GBP) Plummets as ‘There’s Much More Bad News to Come’

The Pound suffered losses today after PMI data revealed the UK had suffered its fastest decline in business activity on record as the coronavirus crisis worsened.

Flash PMI composite showed April’s figure plummeted to 12.9 from 36 in March which weighed on sentiment.

Markit also reported that around 81% of service sector providers and 75% of manufacturing companies reported a decline in business this month. This decline for both sectors was attributed to the coronavirus pandemic.

Commenting on this morning’s data, CIPS Group Director Duncan Brock said:

‘The combined performance of services and manufacturing plunged the UK private sector into the twilight zone in April as the PMI index posted 12.9, again surpassing the survey low of 38.1 in November 2008. Around 81% of UK service providers reported lower business activity in April, which compared with 38% during the worst single month of the global financial crisis.

‘The overall services fall in output was faster than manufacturing and the steepest since records began in 1996 as social distancing measures enforced for the population stopped everything in its tracks and an eerie silence descended over the UK’s streets.

‘There’s nothing to applaud in this month’s results. Even the slight rise in optimism from last month’s record low feels like a blip to what the economy is facing in 2020. The figures for April could not be more worrying but as we may not have reached pandemic peak yet, there’s much more bad news to come.’

Pound Norwegian Krone Outlook: Consumer Confidence and Retail Sales in Focus

Looking ahead to Friday, the Pound (GBP) could extend its losses against the Norwegian Krone (NOK) following the release of confidence data.

If GfK reveals that consumer confidence in the UK has plummeted further than expected in April due to the coronavirus pandemic, GBP will edge lower.

Meanwhile, Sterling investors will also be watching the release of the UK’s retail sales data.

If British sales declines at a rapid pace in March as the coronavirus pandemic hit the nation at full force, this will add to signs the country’s economy is in trouble. If sales plummet further than forecast, it will send the Pound Norwegian Krone (GBP/NOK) exchange rate lower.

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TAGS: Pound Norwegian Krone Forecasts