The British pound regained some ground against the Norwegian krone yesterday. UK’s political parties prepare for a general election in December, promising “radical economic changes not seen in decades.”
Those reforms would come at a time of slowing economic growth in the UK. Economic activity rose at more than 2% before the Brexit referendum. The growth rate is expected to slow down to only 1.2% (and in the second quarter, the UK economy actually shrank).
Markets are now awaiting UK’s PMI for the manufacturing sector, expecting the sixth-straight monthly contraction since June.
A possible headwind for the pound could also be Trump’s comments that, under the current Brexit deal, the UK could have it difficult to strike a trade deal with the United States later on.
Brent crude was extending its losses for the fourth consecutive day. This helped to push the GBP/NOK pair higher in yesterday’s trade. Economic uncertainty and fading trade war hopes increased selling pressure on oil.
The Asian session left the pair mostly unchanged, but we see a symmetrical triangle forming in the last two days. The break of which could lead to much-needed volatility in the GBP/NOK market.
To the upside, buyers could have a hard time trying to push the price above the October high of 11.97. Just below the 12.00 round-number resistance. The bearish RSI divergence also suggests that the recent upturn in pair is losing steam and that a correction might be ahead.
Yesterday’s low of 11.83 acts as a short-term support level to the downside. This is followed by the October 24 low of 11.69. As of 7:05 a.m. London time, the pound traded at 11.90 against the krone.
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