After both the Bank of England (BoE) and Norges Bank opted to hold the respective cash rates, the GBP/NOK exchange rate was trending within a limited range.
The British pound has managed to make gains on both the NOK and the SEK today potentially due to IMF comments.
Although the IMF report on the outcome of ‘Brexit’ was exceptionally negative, this may still be the reason for the Pound’s slight appreciation.
As the IMF warnings have been both concrete and conclusive, some investors may be hoping for this to effectively be the end of the now-wearisome ‘Brexit’ back and forth.
Comments from IMF Director Christine Lagarde helped to bolster optimism towards the British pound (GBP) with a renewed warning on the possible negative impacts of a vote to leave the EU.
Thus, in spite of poor UK construction data, the Pound (GBP) extended its rally against the raft of Scandinavian currencies.
Also supportive of GBP exchange rates was a warning from Bank of England Governor Mark Carney that a ‘Brexit’ may cause recession.
In addition to Norges Bank holding rates, rising crude oil prices caused the Norwegian Krone to strengthen.
Meanwhile, the Swedish Krona dived versus most of its currency rivals after inflation data failed to meet with expectations.
Here are the latest GBP FX rates:
On Saturday the Euro to British Pound exchange rate (EUR/GBP) converts at 0.862
Today finds the pound to euro spot exchange rate priced at 1.16.
At time of writing the pound to us dollar exchange rate is quoted at 1.237.
Today finds the pound to norwegian krone spot exchange rate priced at 13.628.
The pound conversion rate (against swedish krona) is quoted at 13.499 SEK/GBP.
NB: the forex rates mentioned above, revised as of 20th Apr 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.
Pound Sterling (GBP) Exchange Rate News and Outlook
As mentioned above, BoE Governor Mark Carney’s warning that a ‘Brexit’ risks recession caused the British Pound to strengthen considerably. This is because Carney’s comments are thought to be persuasive for those sitting on the fence to vote to remain in the EU.
Even the fact that the central bank cut growth forecast for 2016 to just 2%, thanks to the damaging impact of EU referendum uncertainty, wasn’t enough to offset Sterling gains.
‘A vote to leave the EU could have material effects on the exchange rate, demand and supply potential,’ stated Carney. The consequences ‘could possibly include a technical recession.’
Norwegian Krone (NOK) Exchange Rate News and Outlook
Once Norges Bank opted to hold the official cash rate the Norwegian Krone strengthened versus the majority of its closes rivals.
The central bank’s assessment report stated that ‘inflation remains elevated, but a stronger Krone may contribute to a slightly more rapid decrease in inflation than projected in March. On the other hand, the rise in oil prices may reduce uncertainty and contribute to somewhat higher growth in the Norwegian economy. An overall assessment of new information indicates that the key policy rate should be kept unchanged at this meeting.’
Crude oil prices rose after US stockpiles data showed inventories fell more than expected. With global oversupply concerns ever present, however, there is a good chance that crude prices will fail to sustain appreciation.
Swedish Krona (SEK) Exchange Rate News and Outlook
Swedish ecostats showed that April’s inflation rate declined on both a monthly and annual basis, causing the Swedish Krona to soften versus most of its peers.
A speech from central bank Governor Stefan Ingves did little to support SEK appreciation.
Ingves stated that the central bank needs to rethink oversight of the financial system following macroprudential shortcomings. Ingves stated that clearer responsibility to financial security was the ‘most important issue in a coming review of the Riksbank Act.’