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 driving factor.
Key drivers:
• Rate gap: The Bank of England’s dovish stance contrasts with Norges Bank’s cautious approach, affecting the relative strength of GBP against NOK.
• Risk/commodities: Oil prices have surged above their recent average, which may temporarily support the NOK as Norway relies on oil exports.
• One macro factor: UK political uncertainty and mixed economic indicators, such as rising inflation and steady unemployment, create a complex backdrop for the GBP.
Range:
GBP/NOK is likely to drift within its recent range, hovering near recent lows with limited strong movements expected.
What could change it:
• Upside risk: A more supportive communication from the Bank of England could strengthen the GBP.
• Downside risk: Escalation in UK political instability could weaken the pound further, pushing the rate lower.
