Pound to Norwegian Krone (GBP/NOK) Exchange Rate Heads Higher as Oil Prices Drop on Covid-19 Fears

December 22, 2020 - Written by John Cameron

STORY LINK Pound to Norwegian Krone (GBP/NOK) Exchange Rate Heads Higher as Oil Prices Drop on Covid-19 Fears

GBP/NOK Exchange Rate Rises as Dropping Oil Prices Weaken Norwegian Krone

The Pound to Norwegian Krone (GBP/NOK) exchange rate rose today, with the pairing currently trading around 11.645kr.

The Norwegian Krone (NOK) fell today owning to a fall from highs in oil prices this week, resulting in limited demand for the oil-sensitive Norwegian currency.

Oil trade is a strong driver of Norway’s economy, so tumbling oil prices has driven the NOK/GBP exchange rate downward.

In Norwegian economic data, October’s unemployment rate remained unmoved at 5.2%.

As a result, this has little impact on the Norwegian Krone as the outlook for the nation’s economy remains largely uncertain as Covid-19 cases rise throughout Europe.

Following this week’s announcement of a new Covid-19 strain found primarily in the UK, NOK investors are becoming increasingly concerned that this could negatively impact oil prices in the months ahead.

As a result, we could see the Norwegian Krone (NOK) head downward if oil prices continue to drop on dampening risk sentiment.

Pound (GBP) Heads Higher Despite Brexit Deadlock and New Covid-19 Variant

The Pound (GBP) rose against the weaker Norwegian Krone (NOK) today despite concerns over the UK’s Covid-19 variant, which according to some scientists have been found all around the country.

Consequently, the near-term outlook for the British economy looks increasingly bleak, especially as there has been no clear progress in UK-EU trade talks.

Nonetheless, the outlook has improved after Uğur Şahin, BioNTech’s chief executive, said that the new Covid-19 vaccine is ‘highly likely’ to work on the new coronavirus variant.

Şahin said:

‘[S]cientifically, it is highly likely that the immune response by this vaccine also can deal with the new virus variants.’

Downing Street’s proposal on fishing rights has been rejected by the EU, sparking off concerns that Britain could be leaving without a Brexit deal on January 1st.

Michel Barnier, the EU’s Chief Negotiator, said that talks were in ‘the crucial moment’, saying:

‘We are giving it the final push. In ten days, the UK will leave the single market and we continue to work in total transparency with the member states right now and with the parliament.’

GBP/NOK Outlook: Could the Norwegian Krone Fall as Oil Prices Drop?

The Norwegian Krone (NOK) will remain sensitive to oil prices this week.

As a result, we could see NOK continue to fall if oil prices fall on growing Covid-19 concerns.

Meanwhile, the Pound (GBP) will continue to be driven by Brexit developments.

If UK-EU trade talks remain in deadlock, then we could see the GBP/NOK exchange rate begin to fall as fears of a no-deal Brexit would dampen the outlook for Britain’s economy going forward.

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TAGS: Pound Norwegian Krone Forecasts