The British pound had a relatively calm trading day against the Norwegian krone yesterday, regaining some ground after the sharp sell-off on Friday.
Nevertheless, the Asian session extended pound’s losses as the UK general election and its possible outcomes remain a major focus among investors.
Financial markets have a favourite — Boris Johnson — as his main rival Jeremy Corbyn and his socialist agenda is by many perceived as an inappropriate fit for the UK. PM Johnson heads into the general election with another powerful ally — hedge funds.
Markets are also awaiting a number of important news reports today. Markit Economics releases the UK Services PMI at 9:30 a.m. It is expected to come in at 49.6, a slight pick-up in the service sector compared to last month. Still, any value below 50 indicates industry contraction.
From Norway, we’ll get the change in housing prices at 10:00 a.m. London time. It could give a valuable insight into the country’s housing market and inflation outlook.
The Norwegian krone was also supported by slightly higher oil prices. However, Brent crude is trading near the upper channel line which may attract oil sellers in the short-term.
From a technical standpoint, the bearish divergence between the price and the RSI increased, selling pressure on the pair. It pushed the price near the October 24 low of 11.69.
Yesterday’s long lower-wick candle suggests that markets are rejecting lower prices at the moment. The pair may need a new market catalyst to break below the October 24 support. Or to push significantly higher from current levels. As of 7:15 a.m. London time, the GBP/NOK traded at 11.76.
