Pound Norwegian Krone (GBP/NOK) Exchange Rate Slumps as Wuhan Reports New Wave of Coronavirus Infections

May 11, 2020 - Written by John Cameron

STORY LINK Pound Norwegian Krone (GBP/NOK) Exchange Rate Slumps as Wuhan Reports New Wave of Coronavirus Infections

Pound Sterling Norwegian Krone (GBP/NOK) Exchange Rate Falls as Norwegian Inflation Rises

The Pound Sterling Norwegian Krone (GBP/NOK) exchange rate slumped by around -0.5% this morning, leaving the pairing trading at around 12.6106Kr.

The Norwegian Krone edged higher this morning after the country’s inflation rate edged up higher than expected.

Month-on-month, inflation rose by a better-than-expected 0.4% in April, up from March’s 0%. Annual inflation also ticked higher, rising from 0.7% to 0.8%.

Added to this, core inflation rose from 2.1% to 2.8%.

Meanwhile, oil prices slumped on Monday after a new wave of coronavirus infections in some countries including China weighed on demand. Concerns over a persistent glut in demand offset support from OPEC+’s supply cuts.

Investors worried as Wuhan reported its first cluster of coronavirus infections since the city’s lockdown was lifted just a month ago.

Added to this, South Korea warned of a second wave as countries across the globe began to ease lockdown measures.
This also weighed on the riskier Pound and sent the GBP/NOK exchange rate lower.

Pound (GBP) Slumps as PM Announces Easing of Coronavirus Restrictions

Sterling remained under pressure today, as investors remained cautious about the easing of coronavirus lockdown measures in the UK.

Despite this, markets were offered a boost in sentiment after several countries moved to re-open their economies with a gradual easing of restrictions.

Prime Minister Boris Johnson is expected to give further details on how the economy will get back to work.

This comes after Sunday’s televised address to the nation in which the Prime Minister announced the limited easing of restrictions.

This included encouraging some people to return to work if they were unable to work from home.

Johnson made it clear he wants the rest of the UK to follow his approach. However, this has been met with criticism, and push back from leaders of Scotland, Wales, and Northern Ireland. They announced they would be sticking to the current ‘stay-at-home’ message.

Commenting on this, Viraj Patel, FX and global macro strategist at Arkera noted:

‘Mixed start to the week for the pound - with the cautious UK lockdown easing announced by PM Johnson having little lasting impact on the currency after an initial rally in early Asia trading. Instead, the Dollar remains supported by rising U.S. yields.’

Raab: Workers Not To Return Until June at Earliest

Meanwhile, Sterling remained under pressure after Britain’s Foreign Secretary Dominic Raab stated non-essential workers would not go back to work until June at the earliest.

He also noted that some other sectors would not return to work until July at the earliest.

Speaking today, Mr Raab said:

‘There’s the other changes for things like non-essential retail and people going back to school, particularly primary school, which won’t start until the earliest on the first of June, subject to conditions.

‘Starting from the 4th of July at the very earliest, those other sectors where they are inherently more difficult because people are mixing together and it’s difficult to maintain the social distancing, we wouldn’t be able to say [...] that we would start them at least until the 4th of July.’

Pound Norwegian Krone Outlook: PM’s Lockdown Plans and Norway’s GDP in Focus

Looking ahead, the Pound (GBP) could edge higher against the Norwegian Krone (NOK) after Prime Minister Boris Johnson presents his plan to ease the current lockdown to parliament.

According to ING strategists:

‘Despite facing much criticism for muddying the waters with his speech to the nation last night, Prime Minister Boris Johnson’s efforts to restart the economy may be welcomed by the Pound.’

Meanwhile, Tuesday could see the Norwegian Krone suffer losses following the release of Norway’s Q1 growth data.

If statistics show Norway’s economy has contracted more than expected in the first three months of 2020, the Pound Norwegian Krone (GBP/NOK) exchange rate will edge higher.

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TAGS: Pound Norwegian Krone Forecasts