November 27, 2020 - Written by James Fuller
STORY LINK GBP to NOK Exchange Rate Slumps to 2-Month-Worst as Norway Retail Stats Keep NOK Strong
A combination of Brexit uncertainties and a resilient Norwegian Krone have left the British Pound to Norwegian Krone (GBP/NOK) exchange rate tumbling in recent sessions. While markets remain overall hopeful that negotiators are getting closer to reaching a Brexit deal, the pair is now trending around its worst levels in months.
GBP/NOK opened this week at the level of 11.97. After a brief rebound attempt at the beginning of the week though, GBP/NOK tumbled and has been trending lower ever since.
At the time of writing, GBP/NOK is trending around a low of 11.79. This is the worst level for the pair in two months, since mid-September.
GBP/NOK has been falling consistently in recent weeks as the Norwegian Krone continues to benefit from the global outlook and coronavirus vaccine developments. Last week saw the pair tumble from the level of 12.09.
GBP Exchange Rates Unappealing as Uncertainty Persists Over Status of Brexit Negotiations
The Pound’s outlook has been mixed this week, as the currency is driven by shifts in Brexit speculation.
At the beginning of the week, the Pound briefly strengthened on hopes that the UK and EU were on the cusp of reaching a Brexit deal.
However, since then a lack of perceived developments in negotiations have weighed on the Pound. Investors have been selling Sterling as no-deal Brexit fears return to markets.
In recent sessions, UK and EU officials have been expressing concerns about the lack of progress. EU Chief Brexit Negotiator Michel Barnier reportedly said that he was unsure whether or not a deal could be agreed in time.
This is weighing heavily on the Pound. No-deal Brexit fears are rising and hopes of an imminent deal are being doused.
According to Connor Campbell, Financial Analyst at SpreadEx, markets haven’t taken the latest UK coronavirus developments well either:
‘It appears that investors haven’t taken the latest Covid-19 Tier designations well. With most of the UK set to come out of lockdown into the top 2 most severe levels, the FTSE sank 1% after the bell, forcing the index back towards 6,300.
The Pound, meanwhile, edged 0.1% higher against the Dollar but failed to move against the Euro, as sterling continues to nervously wait for signs that the current Brexit talks are going to finally produce a deal before the end of the year. It’s not looking too promising.’
NOK Exchange Rates Appealing as Oil Prices Continue to Rise
The Norwegian Krone remains broadly appealing, and this is helping it to sustain gains against the weaker Pound today.
Domestic data from Norway is helping the Norwegian Krone to hold higher today.
Today’s Norway retail sales results from October came in much higher than expected. Monthly sales were at 1.2% rather than the expected 0.0%, and the yearly figure rose from 8.7% to 10.6%.
Norway’s November unemployed persons figure was also lower than expected, at 127.7k.
These factors only further boosted the Norwegian Krone, which is already appealing amid market coronavirus vaccine hopes and rebounding oil prices.
Oil is important to Norway’s economy. As a result, oil prices recently hitting their best levels since March have helped the Norwegian Krone to be buoyant as well.
Oil prices have been rising in recent weeks as investors become more optimistic that the global economy could recover from the coronavirus pandemic next year.
According to Analysts at Danske Bank, Norway’s coronavirus restrictions are also lighter than in some other major economies:
‘Like those of its peers, the Norwegian recovery is experiencing a setback from new restrictions. That said, restrictions in Norway are far lighter than in most other European countries. We should expect activity and labour market data to level off in the coming months. With a stable to stronger NOK and lower capacity utilisation, we expect inflation to move towards the 2% target in the coming year.’
GBP/NOK Exchange Rate Forecast: Brexit Remains the Focus as Negotiations Expected
This weekend will see another round of UK-EU Brexit negotiations. While officials have shown a mixed tone on the status of talks in recent sessions, markets remain hopeful overall that a deal can still be made.
If there are optimistic developments in negotiations, the Pound could see stronger performance next week as hopes for a Brexit deal to be reached in time would rise.
However, it’s also possible that Brexit uncertainty will worsen if there is no progress. It is now just over a month until the end of the Brexit transition period, and UK Prime Minister Boris Johnson has said that the transition will not be extended.
As a result, it is possible that the Pound will remain under pressure instead.
Brexit will likely remain the focus, but coronavirus developments could cause some movement as well.
Next week’s UK and Norwegian PMI data from November could give investors a better idea of how these economies performed this month amid fresh coronavirus restrictions. This could cause considerable movement in the Pound to Norwegian Krone exchange rate.
International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.
TAGS: Pound Norwegian Krone Forecasts