June 2, 2020 - Written by John Cameron
STORY LINK Pound to Norwegian Krone (GBP/NOK) Exchange Rate Falls on Bright Outlook for Norway’s Economy
GBP/NOK Exchange Rate Sinks as Norwegian Economic Outlook Brightens
The Pound to Norwegian Krone (GPB/NOK) exchange rate rose fell by -0.4% today, with the pairing currently trading around 11.98kr.
The Norwegian Krone (NOK) has benefited from growing signs that Norway’s economy is picking up. This follows reports that Norway’s coronavirus infection and death rates have remained low, allowing the economy to recovery.
Kjersti Haugland, chief economist for DNB Markets, said that Norwegians ‘have reacted very differently’ and that ‘[c]onsumers feel confident that they don’t really face economic ruin. That’s good news for the economy as a whole.’
Goldman Sachs analysts commented:
‘[Norway’s] demographics and domestic medical infrastructure make it better equipped for the outbreak than many other countries, and its strong fiscal position puts it at a distinct advantage.’
Meanwhile, growing oil prices have also boosted optimism in Norway’s economic strength going forward. With Norway being one of the world’s top seven exporters of crude oil, today’s growing prices of crude oil have further strengthened hopes for the economy.
Pound (GBP) Falls as UK-EU Brexit Talks Renew
The Pound (GBP) fell against the Norwegian Krone (NOK) despite renewing UK-EU Brexit talks. As a result, some Sterling traders are optimistic that the UK may ask for an extension to the transition period beyond 31st December.
However, the UK’s economic situation has continued to drag on the Pound after it was revealed that UK consumers are set to repay a record £7.4 billion o debt in Covid-19 lockdown.
Laura Suter, a personal finance analyst at AJ Bell, commented:
‘The lockdown has created a divide in the country, with some households seeing cuts to income, job losses or being furloughed, while others are seeing their finances benefit from an enforced halt to much of their spending.’
This followed a record plunge in spending in April as people stayed indoors.
Today also saw the release of the UK Nationwide Housing Prices figure for May, which fell below forecasts from 0.9% to -1.7%.
The EY Item Club said in its statement:
‘Housing market activity is likely to be limited in the near term … Many people have already lost their jobs, despite the supportive government measures, while others will be worried that they may still end up losing theirs once the furlough scheme ends.’
GBP/NOK Forecast: Could a Weaker-Than-Expected UK Services PMI Send the Pound Tumbling?
Norwegian Krone (NOK) investors will be looking ahead to Friday’s release of Norway’s Manufacturing Output data for April. Any signs of improvement in Norway’s manufacturing sector would prove NOK-positive.
Sterling traders will be awaiting tomorrow’s release of the final UK Services PMI for May. However, if this falls below consensus and shows a weakening in the UK’s largest sector, we could see the GBP/NOK fall deeper.
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TAGS: Norwegian Krone Forecasts Pound Norwegian Krone Forecasts