GBP/NOK Outlook: Slightly weaker, but likely to move sideways as the rate is below its recent average and near recent lows, lacking a clear driver.
Key drivers:
• Rate gap: The Bank of England maintains a cautious approach amid inflationary pressures, which contrasts with a positive economic outlook for the Norwegian Krone backed by Norges Bank's stability measures.
• Risk/commodities: Oil prices are currently near 90-day highs, supporting the NOK due to Norway's status as a major oil exporter.
• One macro factor: Recent UK economic data, such as retail sales, has shown resilience but may not significantly affect GBP in the short term.
Range: GBP/NOK is likely to hold steady within its recent range, lacking strong catalysts for movement in either direction.
What could change it:
• Upside risk: A rebound in UK economic performance could strengthen the GBP against the NOK.
• Downside risk: Increased geopolitical tensions impacting Norway’s economy might pressure the NOK further, weakening the GBP/NOK rate.