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Pound to Norwegian Krone (GBP/NOK) Exchange Rate Rises as UK Retail Sales ‘Stabilise’ in July

July 28, 2020 - Written by John Cameron

GBP/NOK Exchange Rate Edges Higher Despite Fears of a ‘Simultaneous Shock’ to the British Economy

The Pound to Norwegian Krone (GBP/NOK) exchange rate rose today, with the pairing currently fluctuating around 11.77kr.

Sterling benefited from a stronger-than-expected UK CBI Distributive Trades Survey for July, which rose from -37% to 4%. As a result, GBP investors have become more optimistic about the UK’s retail sector.

Nonetheless, some analysts remained downbeat. The CBI’s Chief Economist, Rain Newton-Smith, said that the ‘picture remains bleak’ for some retailers.

Newton Smith added:

‘It’s great to see retail sales stabilise this month, but this doesn’t tell the whole story. This crisis has created winners and losers within the retail sector.’

Meanwhile, GBP investors have also remained cautious after the London School of Economics (LSE) warned that the UK was headed for a ‘simultaneous shock’ to the economy from both Brexit and the coronavirus pandemic.

Swati Dhingra, an economics professor at LSE, said:

‘Our analysis shows that the sectors that will be affected by Brexit and those that are suffering from the Covid-19 pandemic and lockdown are generally different from each other.’

Norwegian Krone (NOK) Struggles as US-China Trade Tensions Weigh on Oil Prices

The Norwegian Krone (NOK) has continued to suffer this week after reports that Nordic countries could be facing a quagmire owing to the Covid-19 pandemic.

Robert Bergqvist, chief economist at SEB bank, said that 2021 was now ‘surrounded by great uncertainty’, adding:

‘How Europe, the U.S and Asia recover is very important for the Nordics, as the region is dependent on the global economy.’

In Norwegian economic news, today saw the release of the latest retail sales figures for June, which rose from 2.8% to 5.7%.

However, NOK has mainly suffered from rising US-China trade tensions which have curtailed the price of oil, one of Norway’s largest exports. Consequently, this has clipped appeal of the Norwegian Krone.

Fears of a second-wave of the coronavirus has also weighed on risk sentiment and oil prices today. As a result, investors are steering clear of oil-driven currencies like the Norwegian Krone (NOK).

GBP/NOK Outlook: Could a Post-Brexit UK-EU Consensus Buoy Sterling?

The Norwegian Krone (NOK) will continue to be driven by global risk sentiment this week. Any signs of US-China trade tensions escalating would weigh on oil prices and the NOK/GBP exchange rate.

Pound (GBP) traders will be awaiting tomorrow’s release of the latest UK Mortgage Approvals figure for June. If this improves, then we could see the GBP/NOK exchange rate edge higher.

The GBP/NOK exchange rate will remain sensitive to Brexit developments this week. Any signs of a compromise on a possible post-Brexit trade deal between the UK and the EU would prove GBP-positive.

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