GBP/NOK Outlook:
The GBP/NOK exchange rate is likely to decrease as it trades near recent lows, significantly below its 90-day average. Pressures from the Bank of England's rate cut expectations continue to weigh on the Pound.
Key drivers:
• Rate gap: The Bank of England is expected to cut interest rates in response to rising unemployment, contrasting with Norges Bank's cautious approach that supports the Krone.
• Risk/commodities: With oil prices trading at recent highs, the strong performance of the Norwegian oil sector supports the NOK, making it more robust against a weakening GBP.
• One macro factor: UK consumer inflation is anticipated to cool, which could prompt faster policy easing from the Bank of England, adding further pressure on the Pound.
Range:
GBP/NOK is set to drift within its recent range, as the rate is currently towards the lower end.
What could change it:
• Upside risk: A surprise boost in UK economic data could create positive momentum for the GBP.
• Downside risk: Further disappointing economic indicators from the UK may accelerate expectations of deeper rate cuts from the Bank of England.