October 22, 2020 - Written by John Cameron
STORY LINK Pound to Norwegian Krone (GBP/NOK) Exchange Rate Falls as Optimism Grows for Norway’s Economy
GBP/NOK Exchange Rate Sinks as Norway Shrugs Off Disappointing Unemployment Data
The Pound to Norwegian Krone (GBP/NOK) exchange rate fell by -0.2% today, with the pairing currently fluctuating around 12.101kr.
The Norwegian Krone (NOK) rose today despite disappointing Norwegian unemployment rate figures, which rose from 5.2% to 5.3% in August.
However, confidence in Norway’s economy was boosted after a stronger-than-expected performance in the nation’s industrial confidence index, which rose in the third quarter.
Norway’s industrial index rose to 1.7%, recovering from last month’s dismal -9.6 and renewing confidence in the economy.
Analysts at Reuters were more optimistic about Norway’s economy, saying:
‘The recession in Sweden and Norway from the COVID-19 pandemic is now expected to be shallower than originally projected, but forecasts for the recovery next year have been trimmed back in the latest Reuters poll of economists.
‘The Nordic countries, including Denmark and Finland, have been less badly hit than many European economies, despite taking very different approaches to fighting the spread of virus, with Sweden opting for the most lax response on the continent.’
Pound (GBP) Dips as UK Markets Await Brexit Updates
The Pound (GBP) fell today as UK markets brace for further updates on UK-EU trade talks. Michel Barnier, the EU’s Chief Negotiator, is expected to intensify trade talks between the two sides in London.
Nonetheless, Downing Street was more sceptical, saying that ‘significant gaps’ remain in difficult areas, while it was also ‘entirely possible that negotiations will not succeed’.
Consequently, GBP investors are remaining cautious as a lack of progress in UK-EU talks could increase the odds of a no-deal Brexit later this year.
Meanwhile, Sterling investors were relieved after the Bank of England’s (BoE) chief economist, Andrew Haldane, poured cold water on speculation over negative interest rates.
Mr Haldane said:
‘We at the Bank are doing work to ensure that that tool is in the toolbox.
‘That is not remotely the same as saying that we are about to deploy that tool. That will depend on the balance of costs and benefits.’
In UK economic data, today saw the release of the latest CBI Industrial Trends Survey for Orders, which fell by -34% in October.
As a result, GBP investors are becoming increasingly concerned for the health of the British economy, with the manufacturing sector facing a significant downturn due to the Covid-19 pandemic.
GBP/NOK Outlook: Could a Breakthrough in Brexit Talks Boost Sterling?
Pound (GBP) investors will be looking ahead to tomorrow’s release of the preliminary UK Services PMI for October.
Any improvement in the British services sector would boost the GBP/NOK exchange rate.
However, GBP investors will be closely monitoring Brexit developments, with any signs of a breakthrough on a post-Brexit trade deal sending the Pound (GBP) skyrocketing.
Norwegian Krone (NOK) investors will be watching Norway’s Covid-19 own crisis. If the infection rates continue to climb up, we could see NOK shed some of its gains.
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TAGS: Norwegian Krone Forecasts Pound Norwegian Krone Forecasts