The British pound slipped against the Norwegian krone on Thursday. Bank of England (BoE) unexpectedly took a dovish stance at their monetary policy meeting.
While the central bank held rates steady at 0.75%, two members of the rate-setting panel voted for a rate cut – Jonathan Haskel and Michael Saunders. This was against market expectations of a 9-0 decision to keep rates on hold. The bank also slashed GDP growth forecasts to 1.6% in 2020.
Slowing economic growth and inflation below target have been plaguing the UK for quite some down now. Brexit uncertainties only add more fire to the troubled economy. December general election could possibly change the country’s course completely, depending on which party will get the majority. Everything is still on the table – from no-deal to no-Brexit.
As the election campaign is heating up, the UK’s major parties are promising big spending plans after almost a decade of fiscal austerity. All other things being equal, a loose fiscal policy would increase demand for pounds and lead to an appreciation of the currency.
From a technical standpoint, the GBP/NOK pair broke below an ascending triangle pattern on the daily chart. It projected a 1.8% fall from the breakout point to around 11.55. This level aligns with the highs of March and May that form an important support zone.
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