Despite the Pound’s strength cooling today after yesterday’s jump in demand, the British Pound to Norwegian Krone (GBP/NOK) exchange rate has held most of Monday’s impressive gains and continues to trend relatively close to highs. The Pound is a little steadier ahead of tomorrow’s anticipated UK budget presentation, while the Norwegian Krone remains highly unappealing amid coronavirus jitters and the developing oil price war.
Coronavirus jitters and oil price losses ultimately helped GBP/NOK to advance slightly last week. GBP/NOK opened the week at the level of 12.04 and trended lower throughout the week before recovering and closing at the level of 12.07.
This week’s GBP/NOK movement has been sharper in comparison though. GBP/NOK quickly surged over half a Krone higher on Monday, briefly touching on a high of 12.64. Impressively, this was better than GBP/NOK’s pre-Brexit referendum levels, and the best level for the pair since January 2016.
While GBP/NOK has slipped slightly from those impressive highs, it continues to trend high in the region of 12.39 at the time of writing.
GBP Exchange Rates Mixed as Investors Await UK Officials Comments on Coronavirus
The Pound experienced a surge in demand yesterday, taking it to highs as it capitalised on weakness in major rivals like the US Dollar.
Sterling has also benefitted from market speculation that Britain’s economy could be more resilient than expected in the face of the coronavirus outbreak.
Speculation is rising that amid signs of economic rebound, a Bank of England (BoE) rate cut or a rise in UK government spending could boost domestic growth and offset some of the coronavirus concerns.
Due to hopes that the upcoming UK budget presentation could see a boost in UK government spending, the Pound is steadying today amid anticipation for the budget tomorrow.
The rising focus on coronavirus means that while hard Brexit jitters persist, they have been largely overshadowed.
NOK Exchange Rates Continue to See Broad Losses on Oil Prices and Domestic Outlook
The Norwegian Krone has had a particularly bearish time lately, and this doesn’t appear to be likely to change any time soon.
As the coronavirus outbreak spreads, it has hit the global economic outlook and caused major central bank interest rate cut bets to rise.
On top of this though, the outbreak has also throttled prices of oil and other commodities. As Norway is an oil exporting market, the Norwegian Krone has been hit hard by the recent weakness in oil prices.
This is why the Norwegian Krone continues to see significant losses as an oil price war has developed in recent sessions. As OPEC+ oil producers failed to reach a deal to cut oil prices, Saudi Arabia announced it would sharply cut oil prices in an attempt to get back at Russia.
Other oil producers have been cutting prices as a result and the commodity’s prices only fall lower and lower. The already weak Krone is even weaker due to the oil price war. According to Analysts from ING:
‘Unsurprisingly, and in line with the price action today, the oil exporters (NOK and CAD) look most vulnerable. In particular, we underscore NOK’s downside risk in the context of the low liquidity of the currency (based on the BIS data, NOK is the least liquid currency in the G10 FX space) which in times of stress introduces the risk of an exaggerated fall in the Krone.’
The Norwegian Krone is already being hit hard by coronavirus jitters and the oil price war, but today’s Norwegian inflation rate stats also fell short of expectations.
To top it all off, the Norges Bank is widely expected to cut Norway’s interest rates in its upcoming policy decision next week.
GBP/NOK Exchange Rate Forecast: Britain’s Spring Budget in Focus
The Norwegian Krone continues to be hit hard by coronavirus concerns, oil price war news and Norges Bank easing bets.
However, if upcoming UK news disappoints investors the Pound to Norwegian Krone exchange rate could fall from its recent highs more easily.
As a result, investors are closely watching tomorrow’s UK budget presentation.
Speculation is high that the UK government is under pressure to ramp up spending and offer fiscal stimulus, in order to defend the economy from the impact of the coronavirus Covid-19.
If the budget disappoints investors with less fiscal stimulus than expected, hopes of a UK economic rebound will be doused and the Pound could weaken.
As for the Norwegian Krone, it will continue to be driven by coronavirus and oil price developments which will in turn influence the Pound to Norwegian Krone exchange rate.
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TAGS: Pound Norwegian Krone Forecasts