Pound Sterling to Norwegian Krone (GBP/NOK) Exchange Rate Recovers, Sterling Stronger
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Last week the Norwegian Krone managed to achieve a two-week high against the Pound in response to unexpectedly strong trade figures for the Scandinavian nation.
The Norwegian Krone also advanced on the Euro.
Previously, the Krone broadly advanced after Norway’s Consumer Price Index showed that inflation had climbed to a six-month high.
The result reduced pressure on the Norwegian central bank to cut interest rates any further. Norges Bank recently hinted that interest rates could be increased before the close of 2015.
In his last policy statement, Norges Bank Governor Oystein Olsen asserted; ‘The analyses imply that the key policy rate be held lower than previously projected. There are prospects that the key policy rate will remain at about today’s level to the end of 2015, followed by a gradual rise. A further weakening of the outlook for the Norwegian economy may warrant a reduction in the key policy rate.’
However, as a new week of trading kicked off, it was the Pound’s turn to advance on the Krone.
The Pound Sterling to Norwegian Krone exchange rate jumped in response to comments issued by Bank of England Governor Mark Carney.
In another unexpected twist to the interest-rate-increase tale, Carney has backtracked on previous remarks regarding the necessity of getting average growth in line with inflation before hiking borrowing costs.
In the opinion of some industry experts, Carney is trying to reignite speculation that borrowing costs could be increased in 2014.
Economist Stephen Lewis notes; ‘If it became the common belief that the BoE’s decisions had been politicised, the result might be extremely damaging to the credibility of the BoE’s monetary policy. It might appear we were back to the ‘bad old days’ pre-1997, when Chancellors expected to have input into interest rate decisions. […] any forward guidance Mr Carney now gives suggesting interest rates will not rise this side of the election would run the risk of confirming suspicions the rate decision had been politicised. That gives the BoE Governor strong reason to slap down market expectations whenever they begin to veer towards the first rise in rates being delayed until well into 2015.’
The Pound managed to maintain a stronger position against the majority of its currency counterparts throughout the European session.
Pound Sterling to Norwegian Krone Exchange Rate Forecast
The week’s big Norwegian news, the nation’s GDP figure for the second quarter of the year, is scheduled to be published on Thursday.
The data is expected to show expansion of 0.4% on a quarter-on-quarter basis, following quarterly growth of 0.3% in the first quarter of the year.
On the year the economy is believed to have expanded by 1.5% in the second quarter.
Volatility in the Pound Sterling to Norwegian Krone exchange rate could also be caused by the week’s UK news, including the nation’s inflation data and retail sales report.
The Bank of England meeting minutes are unlikely to provide any new information and therefore may have little impact on the Pound Sterling exchange rate.
The Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate is currently trading in the region of 10.2846.