GBP/NOK Outlook:
The GBP/NOK rate is likely to decrease, as it trades significantly below its recent average and is near recent lows. Current pressures from interest rate cut expectations from the Bank of England are weighing on the Pound.
Key drivers:
- Rate gap: The Bank of England is signaling potential rate cuts, while Norges Bank maintains a cautious holding pattern, which favors the NOK.
- Risk/commodities: Higher oil prices are supporting the NOK, given Norway's strong oil sector; oil is currently trending upward, which enhances the Krone's strength.
- One macro factor: The UK's political uncertainties are contributing to weakness in the GBP, particularly around recent electoral concerns.
Range:
GBP/NOK is expected to drift within its recent range, given the current bearish pressure.
What could change it:
- Upside risk: A surprise positive economic data release in the UK could boost GBP.
- Downside risk: Continued political instability or further clues about BoE rate cuts could push GBP lower.