Last week’s Markit PMIs showed that growth in the UK construction and manufacturing sectors slowed by more-than-expected in November, but Pound Sterling (GBP) has shrugged off economic woes to trend bullishly versus the Denmark Krone (DKK), the Norwegian Krone (NOK) and the South African Rand (ZAR).
With the PMIs, George Osborne’s Autumn Statement and the Bank of England (BoE) Stability Report all weighing on the Pound exchange rate complex, the British unit has relied on weakness overseas in order to better peers.
Turbulence in the Euro (EUR) exchange rates market following the European Central Bank’s (ECB) minimal change to monetary stimulus policy has weakened DKK and NOK, with investors concerned over the impact of the common currency on other EU countries.
A quick foreign exchange market summary before we bring you the rest of the report:
On Sunday the South African Rand to British Pound exchange rate (ZAR/GBP) converts at 0.042
FX markets see the pound vs south african rand exchange rate converting at 23.733.
The pound conversion rate (against danish krone) is quoted at 8.809 DKK/GBP.
Today finds the pound to indian rupee spot exchange rate priced at 105.4.
FX markets see the pound vs swedish krona exchange rate converting at 13.761.
The live inter-bank GBP-NOK spot rate is quoted as 13.95 today.
NB: the forex rates mentioned above, revised as of 28th Apr 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.
A strong US Dollar (USD), buoyed by another better-than-expected Non-Farm Payrolls release, has also helped to create opportunities for GBP to appreciate.
British Pound Exchange Rates Unhindered by Impending BoE Rate Decision
The Bank of England’s Monetary Policy Committee (MPC) meet on Thursday to discuss interest rates and asset purchasing.
While other currencies have seen a lull in trade before their central banks make monetary policy decisions, Pound Sterling seems unaffected, as the market strongly believes that the BoE will leave interest rates on hold at 0.50%, with the first rate hike now predicted to come in 2017.
GBP is currently trending up 0.6% against DKK, 0.7% against ZAR and 1.2% against NOK.
Poor Industrial Production Figures Drag on Danish Krone Conversion Rate
Danish industrial production has slowed this month, with growth rates falling from 3.55% to 0.26% year-on-year (YOY), significantly below the expected level of 2.53%.
Month-on-month (MOM) industrial production remained steady at around -0.84%, despite being forecast to rise to 0.28%.
The Krone is also hit by the right-wing coalition government’s decision to cut funding for green energy projects – damaging Denmark’s reputation as a world-leader and innovation hub for green technology.
Norwegian Krone (NOK) Exchange Rate Weak as Manufacturing Contraction Accelerates
Poor industrial and manufacturing production figures for Norway have seen the Norwegian Krone fall from its already low position, with YoY industrial production defying expectations of a rise to drop instead from 2.0% to -3.0%, while manufacturing production contraction doubled pace to -8.4%.
Norway is already struggling from the global oil oversupply, with the slumping price of oil threatening to push the country’s economy back into recession.
Europe’s biggest producer of oil and gas has already had to halve its benchmark interest rate to 0.75%, with cuts to a record low of 0.50% predicted for the next Norges Bank meeting on the 17th of December.
South African Rand (ZAR) Exchange Rate News: Currency Downgraded
A slump in commodity prices is weighing heavily on the Rand, with forecasts that gold could fall below US$900 per ounce in 2016 casting a shadow over South Africa’s mining-centric economy.
Being downgraded to the lowest investment rating by Fitch, as well as remaining on Standard & Poor’s BBB- rating (one level above a junk rating) has also seen the Rand fall.
According to ratings agency Standard and Poor’s: ‘External demand is weak, with low commodity prices, and the country faces domestic constraints including an inadequate electricity supply and overall weak business confidence inhibiting substantial private sector investment.’
Sterling Exchange Rate Forecast: Thursday Interest Rate Hold Expected
While the BoE interest rate decision on Thursday is unlikely to spark much movement in the GBP exchange rates, comments from the BoE in the accompanying minutes could help clarify the likelihood of future raises.
Thursday also sees the release of inflation figures for both Denmark and Norway.
South African mining figures are due out tomorrow and are expected to disappoint, which will further harm the currency.
Norwegian Krone Exchange Rate News Update: 900 Jobs Lost in Norway’s Chief Oil Region
The region laying between Stavanger and Kristiansand, Norway’s key oil producing region, continues to suffer an economic downturn as more workers are due to be laid off.
National Oilwell Varco Norway, which has already laid off 1,500 workers and all of its external contractors, has announced the loss of another 900 jobs, blaming a lack of demand for its drilling equipment and pipe inspection services.
The news comes after another manufacturer revealed it may be forced to lay off 400 staff after severe flooding damaged its factory and inventory.
Pound Sterling has been able to advance 1.5% on the Norwegian Krone.
British Pound (GBP) Advances Against Rand (ZAR) as South African Current Account Deficit Widens
The South African Current Account has posted a larger-than-expected deficit, widening from ZAR-124 billion to ZAR-165 billion, greatly exceeding forecasts of ZAR-136.9 billion.
The news has seen Pound Sterling make small gains on the Rand, helped by a -0.2% contraction in the Halifax House Price index, softening fears of a UK housing bubble.
While GBP is losing gains made during yesterday’s London session against DKK and NOK, it could continue to advance against ZAR with South African mining figures due out later and expected to print negatively.