The British pound extended its gains against the Norwegian krone for the third consecutive day on a mix of robust UK PMI data and softer oil prices.
As expected, Brent crude faced slight selling pressure during the Asian session after the price reached the upper channel resistance, which likely impacted the krone as well.
On the Brexit front, PM Boris Johnson will formally start his election campaign after meeting with Queen Elizabeth II today, which, once again, makes the pound vulnerable to any Brexit headlines in the coming period.
This morning, the pound is mixed to slightly higher against other majors. We still believe that the shift in bearish investor positioning over the last week could support the pound in the coming days, especially after the latest CoT report showed of cut of net GBP shorts of $1.6 billion — the single largest swing in investor positioning of any major currency.
Today’s economic calendar is light for both currencies, which could make the GBP/NOK pair choppy as markets look for a direction.
Looking at important technical levels, we see a bearish divergence between the price and the RSI still active, but also a possible ascending triangle forming on the daily chart. Most of the time, triangles signal indecision in the market and a period of consolidation as investors are looking for a trading catalyst.
The 11.90 level will most probably act as a strong resistance for the pair with a large number of sell orders waiting to be filled. To the downside, the lower triangle support in the 11.75-11.77 range could create fresh buying pressure in the market. As of 7:00 a.m. London time, sterling traded at 11.8333 against the krone.