The GBP to NOK exchange rate is currently range-bound.
Key drivers include:
- The interest rate differential shows the Bank of England is expected to cut rates to 3.25% by mid-2026, while the Norges Bank has maintained its rate at 4.0% amid inflation concerns.
- The recent decline in oil prices is impacting the NOK, complicating Norges Bank's approach to monetary policy.
- UK growth forecasts have been downgraded, with the economy expected to grow only 1.2% in 2026, exerting downward pressure on the GBP.
Near-term, the exchange rate is expected to trade within a stable range.
Upside risks for the GBP could arise from unexpected positive economic data from the UK, while downside risks may include further declines in oil prices, which could weaken the NOK further.