Bias: bullish-to-range-bound, GBP/NOK sits above its 90-day average and in the upper half of the three-month range.
Key drivers:
- Rate gap: BoE remains cautious on cuts and aims to ease gradually this year, while Norges Bank keeps policy tight for longer.
- Oil/risk: Oil prices sit near multi-day highs with volatility, supporting the NOK because Norway exports oil.
- Macro factor: Inflation trends in the UK are easing toward the BoE target, allowing a steady pace of policy adjustments that may keep the pound resilient against the krone.
Range: GBP/NOK is likely to drift within the three-month range, testing toward the upper end but not breaking out.
What could change it:
- Upside risk: UK data surprises to the upside, delaying UK rate cuts and keeping the rate gap supportive for GBP.
- Downside risk: Oil price retreat and earlier or larger Norges Bank rate cuts could lift the NOK and temper gains for GBP.