June 10, 2020 - Written by John Cameron
STORY LINK Pound Norwegian Krone (GBP/NOK) Exchange Rate Falls as Rising Oil Prices Buoy Norwegian Currency
GBP/NOK Exchange Rate Falls as Norwegian Parliament Boosts Oil Industry
The Pound to Norwegian Krone (GBP/NOK) exchange rate rose by 0.4% today, with the pairing currently trading around 11.84kr.
The Norwegian Krone (NOK) rose against the Pound after the Norwegian Parliament pumped great sums of money into a support-package for the nation’s oil industry. As a result, NOK investors are beginning to see a light at the end of the tunnel for Norway’s economic recovery.
Finance Minister Jan Tore Sanner commented:
‘Increased spending has been a necessity in the current situation – both to avoid an even sharper downturn and to help healthy companies through the crisis so they can create jobs and growth when normal circumstances return.’
NOK has continued to benefit from a steady rising in oil prices over the past few weeks. With Norway’s economy heavily reliant exporting oil, the economy is looking more and more likely to improve over the later part of the year.
Meanwhile, today saw the release of Norway’s inflation figure for May, which beat forecasts and rose by 0.2%. Consequently, this boost market appetite for the Norwegian Krone.
Pound (GBP) Falls as Post-Brexit Jitters and UK Economic Outlook Weigh on Sterling
The Pound (GBP) struggled to gain against the Norwegian currency today despite Prime Minister Boris Johnson announcing that the UK’s retail sector would reopen from 15th June.
However, with pubs, restaurants, and hairdressers not due to open until early-July, investors are feeling increasingly concerned about the UK’s economy.
Post-Brexit negotiations have also remained in focus today, after a key UK Government minister said that the UK would not be asking the EU for an extension of the transition period beyond 31st December.
Jonathan Portes, Professor of Economics and Public Policy at the School of Politics & Economics of King's College, was downbeat in his assessment, saying:
‘Covid-19 pandemic and Brexit are major shocks for the UK economy. The interaction of the two is complex and unpredictable, with the potential to amplify some impacts while moderating others.
‘On balance, the pandemic probably does make the economic risks of exiting transition on January 2021 without a trade deal larger, but considerable uncertainties remain.’
GBP/NOK Outlook: Could Weak UK GDP in April Drag Sterling Down Deeper?
Norwegian Krone (NOK) investors will be paying close attention to oil prices for the remainder of this week. Any further signs of a stabilisation in oil prices would prove NOK-positive.
Meanwhile, Sterling traders will be looking ahead to Friday’s release of the final UK GDP report for April. However, if this confirms reports and sinks to -18.4%, then we could see the GBP/NOK exchange rate fall further.
The GBP/NOK exchange rate will likely remain subdued this week as the Norwegian Krone (NOK) is supported by rising oil prices and an improving Norwegian economy.
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TAGS: Norwegian Krone Forecasts Pound Norwegian Krone Forecasts