Brexit fears and weak inflation saw Pound Sterling slump against the Norwegian Krone recently, despite poor data from Norway.
Better-than-expected UK retail sales helped to boost the GBP/NOK exchange rate further, with consumer confidence appearing to remain strong despite ongoing political uncertainty.
Although hopes of some agreed action from OPEC to ease the global oversupply glut have increased, boosting the price of oil, this has not been enough to particularly shore up the Norwegian Krone.
Oil prices have remained volatile on Wednesday morning, with investors somewhat jittery ahead of the latest US inventory report.
As a result the Pound to Norwegian Krone exchange rate has rallied, despite the rather mixed nature of the latest batch of UK employment data and worries over the outlook of the domestic economy.
On Tuesday the GBP NO continued to extend its worst daily levels on Tuesday afternoon. While Sterling attempted to recover slightly, prices of oil helped the Krone to remain bullish.
Oil prices continued to improve throughout Tuesday trade, jumping from 2% up when European markets opened in the morning to an impressive 4% up in the afternoon.
Initially, traders were in a bearish mood with regards to Pound Sterling exchange rates, thanks to a leaked report written for the Cabinet office.
The memo, compiled by a consultant of his own initiative and later refuted by the government, claimed that there was still no actual plan for Brexit, with the disorganisation potentially delaying the proposed Brexit timetable.
Later, a surprise slowdown in inflationary growth scuppered hopes that the Bank of England (BoE) would be motivated to tighten monetary policy in the near-term.
Before the news continues, here are the latest NOK FX rates;
On Tuesday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
FX markets see the pound vs pound exchange rate converting at 1.
At time of writing the pound to us dollar exchange rate is quoted at 1.251.
The GBP to CAD exchange rate converts at 1.717 today.
NB: the forex rates mentioned above, revised as of 7th May 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.
Brexit bearishness helped the Norwegian Krone to advance versus Pound Sterling, despite the latest disappointing results from domestic data.
NOK/GBP exchange rates were able to escape the dragging effect of domestic data recently thanks to the weakness in the British Pound.
While the trade surplus climbed significantly, the rise from NOK3.6 billion to NOK10.4 billion was over -NOK2 billion below expectations.
Even more disappointing, the Q3 growth rate shocked economists after showing unexpected contraction in the Norwegian economy.
QoQ growth clocked in at -0.5% instead of accelerating from stagnation to 0.3% expansion as forecast, while the economy shrank -0.9% YoY against projections of an uptick from 2.5% to 2.8%.
While there is domestic data due from the UK tomorrow, Pound Sterling to Norwegian Krone exchange rates could remain dominated by Brexit speculation.
Fears that the government lacks any clear vision for Brexit may dominate GBP exchange rates now that they have returned to the forefront of trader’s minds.
This could mute the impact of tomorrow’s data, which includes the jobless claims change and claimant count rate, as well as the ILO unemployment rate and employment change figures.
Considering inflation is still set to skyrocket, markets may pay particular attention to the average weekly earnings figures; if wage growth weakens then the impact of rising prices upon consumers will be even more keenly felt.
NOK Exchange Rate Forecast: Could OPEC Hopes Boost NOK Higher?
There is no economic data scheduled for release from Norway for the rest of the week, leaving movement in the oil markets as the key driver of Krone exchange rates.
Markets continue to focus on the upcoming OPEC meeting, in which it is hoped that the oil cartel will agree to cut production in order to boost oil prices.
As a major oil-producing nation, Norway would clearly benefit from such action; oil climbed over 3% on Tuesday on speculation the cartel would go through with the proposed cuts, so further talk of a deal would continue to support NOK.