The British pound surged against the Norwegian krone in yesterday’s trade. Based on news that the Labour Party would support a general election in December, it reached an intraday of 12.00.
Labour’s Jeremy Corbyn called the election “a once-in-a-generation chance to rebuild and transform our country”. While Jo Swinson said, “… it is our best chance to elect a government to stop Brexit.”
A report by the NIESR found that Johnson’s Brexit deal would cost the UK £70 billion more a year than if it had stayed in the EU.
Nevertheless, the pair gave back most of the gains by NY close. The pair traded inside a narrow range between 11.87 and 11.88 during the Asian market. As of 7:15 a.m. London time, the pound traded at 11.8835 against the Norwegian krone.
From a technical standpoint, yesterday’s pinbar signals a strong rejection of levels near the 12.00 round-number resistance. If combined with a bearish divergence in the RSI might put additional selling pressure on the pair.
Lower oil prices for the third consecutive day were not supporting the Norwegian krone. The currency has been one of the worst-performing currencies among developed countries so far this year. Deteriorated risk appetite among global investors doesn’t really favour currencies of small, open economies like Norway.
We saw yesterday’s sharp rally to 11.9710 as an important resistance level for the pair. It would need a fresh wave of positive Brexit news for the pair to trade higher.
To the downside, yesterday’s low of 11.82 acts as a potential support level for the pair, followed by last week’s low of 11.69.
