The British pound gave back some gains against the Norwegian krone during the Asian session after having surged to the loftiest level since mid-2016. Brexit uncertainties keep weighing on sterling after PM Johnson called for a snap election, while the Norwegian krone looks supported by higher oil prices, despite a dovish Norges Bank meeting last week.
As of 7:00 a.m. London time, the pound traded at 11.784 against the Norwegian krone.
The latest Commitment of Traders report, published by the CFTC, showed a weekly increase in bullish bets on sterling in the amount of $1.6 billion, following an agreement between EU and UK officials. The total bearish positioning on the pound is reduced to $4.2 billion and shows a decreasing trend.
Nevertheless, the latest report covered changes in positions until October 22 and didn’t capture the shift in appetite for the pound in the second half of the week.
The recent upturn in the GBP/NOK pair still looks overstretched from a technical standpoint, with the RSI just below overbought levels. Notice that the MACD histogram has turned red, which could suggest further weakness in the pair.
It could be a possible support level at the Thursday low of 11.69, the break of which could send the price significantly lower. To the upside, the October 18 high of 11.91 acts as an important resistance level, followed by the round-number resistance of 12.00.
Short-term risks for the NOK and GBP include the Norwegian retail sales data (expected is a slight increase to 0.2% m/m) and the UK PMI for the manufacturing sector, scheduled for October 30 and November 01, respectively.