GDP Forecast Softens the British Pound Against ZAR, NOK, SEK, DKK
What little gains GBP was able to make today are being gradually given up as the British asset sinks into negative territory against DKK and SEK, while continuing to make losses against ZAR and NOK.
Plundering oil prices should be keeping NOK weak, but the poor outlook for UK GDP is keeping GBP weak against it and ZAR, SEK and DKK.
UK GDP forecasts by the Confederation of British Industry (CBI) have been revised down by -0.3%, keeping GBP weak against ZAR, NOK, SEK, DKK.
Pound Sterling is just holding onto opening levels against the Norwegian Krone and the Swedish Krona and is deep in negative territory verses the South African Rand and the Danish Krone.
Earlier: According to the National Institute of Social and Economic Research (NIESR) growth in the UK economy slowed to just 0.4% in the three months to January, with poor manufacturing and industrial production dragging on growth.
The institute’s overall growth forecast for 2016 is 2.3%, although the widening trade deficit is expected to be a significant dragging factor.
Earlier: Downside pressures have continued to pull down the Pound Sterling (GBP) this week, as debate increases over the UK’s future in the European Union and odds continue to point to the Bank of England (BoE) leaving interest rates lower for longer.
Despite mounting global risk aversion the Norwegian Krone (NOK), Swedish Krona (SEK) and Danish Krone (DKK) have all been making strong gains against the Pound as traders desert the currency in favour of more rewarding rivals.
While the UK’s December visible trade deficit narrowed further than expected from -11.5 billion to -9.9 billion Pounds this was ultimately not sufficient to sustain a Pound Sterling rally, with sentiment remaining largely bearish.
Here are the latest fx rates for your reference:
On Saturday the Norwegian Krone to British Pound exchange rate (NOK/GBP) converts at 0.073
The GBP to NOK exchange rate converts at 13.628 today.
The GBP to SEK exchange rate converts at 13.499 today.
FX markets see the pound vs danish krone exchange rate converting at 8.661.
Please note: the FX rates above, updated 20th Apr 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
The dovishness of the BoE’s recent policy meeting and downwardly revised inflation report has weighed heavily on the Pound (GBP), with some economists prompted to dial back their expectations for the first interest rate hike as far as 2020.
BoE Deputy Governor Jon Cunliffe added momentum to the Pound’s latest downtrend on Tuesday afternoon, with comments on the rapid growth of credit within the UK economy seeming to reinforce the view that policymakers will leave rates unchanged for some time to come.
While the Pound seems unlikely to stage a particular recovery over the coming days, with stronger domestic data expected to remain overshadowed by ‘Brexit’ worries, researchers at Lloyds Bank note:
’A successful agreement between the UK and the EU at the February 18-19 summit would add some clarity on the timing of the referendum and allow PM Cameron to announce his support for the UK to remain in the EU.’
Oil Price Volatility Fails to Weigh on Norwegian Krone (NOK)
In spite of the absence of Chinese trading global markets have fallen further on Tuesday, with slowdown concerns continuing to drive movement away from more risk-sensitive currencies and pushing oil back towards the $32 mark.
However, this has failed to particularly weigh on the Norwegian Krone to Pound Sterling (NOK/GBP) exchange rate, with investors gaining some measure of confidence ahead of Wednesday’s Norwegian Inflation Rate.
As domestic inflationary pressure is forecast to have picked up in January the Norwegian Krone is expected to maintain an uptrend against the Pound, although further weakness in oil prices could undermine the advance of the currency.
Pound Sterling to Swedish Krona (GBP/SEK) Exchange Rate Slumps ahead of Riksbank Rate Decision
The Swedish Krona has equally been benefitting from the recent softness of the Pound, in spite of expectations that the Riksbank will opt to cut interest rates further into negative territory on Thursday.
Nevertheless, investors remain divided on the possibility that the Swedish central bank will feel the need to cut rates again as recent economic growth contrasts with weaker inflation and global downside risks.
Should the Riksbank leave its monetary policy unchanged this week, though, the Swedish Krona to Pound Sterling (SEK/GBP) exchange rate can be expected to remain on a stronger uptrend, in spite of market volatility.
Danish Krone Strengthens despite Disappointing Narrowing of Trade Surplus
Although Denmark’s December trade surplus unexpectedly declined from 5.2 billion to 1.9 billion Danish Krone the currency has failed to remain on a downtrend for long.
Despite a sharp decline in the German trade surplus having pushed the Euro (EUR) lower against rivals the single currency was soon bolstered by prevalent safe-haven demand, pulling the Danish Krone higher with it.
As Wednesday’s Danish Inflation Rate is forecast to show a modest uptick in inflationary pressure the Danish Krone to Pound Sterling (DKK/GBP) exchange rate could continue to make strong gains in the coming days.
GBP-DKK, GBP-SEK Strong Despite Disappointing UK Production Stats
UK industry and manufacturing performed worse-than-expected in December, with the figures printing significantly lower than the already poor forecast.
Industrial Production dropped -1.1% on the previous month in December, while Manufacturing Production fell -1.7% year-on-year (YoY).