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The British pound was little changed to slightly higher against the Norwegian krone this morning. It’s recovering some ground after a strong sell-off on Friday.
Brexit headlines continue to dominate the pair as the election campaign is heating up and the Conservatives fight for a majority in the Parliament. At the Confederation of British Industry conference, Boris Johnson is expected to announce some tax cuts for small businesses. This might include the construction industry. The Conservatives have previously been criticized over plans to cut immigration after Brexit. A move that could have long-lasting consequences on the British economy.
Nevertheless, investors continued to lower their bearish bets on the British pound, according to the latest CoT report. Speculative short positions have fallen by 1.538 contracts last Tuesday, taking the total net short to around $2.2 billion.
However, long positions have also been reduced by 636 contracts. This may signal that investors are reducing their total exposure to the pound ahead of the December general election.
While there are no important market reports scheduled for today, the Norwegian krone could be affected by softer oil prices. Brent crude went down 0.32% this morning.
Technical levels show that the GBP/NOK pair respected the triangle resistance and the 61.8% Fib level, as outlined in our previous articles. The indecisive Spinning Top candle of Thursday signaled that sellers were joining the market again. This was followed by a strong bearish candle on Friday.
With a pullback to the broken triangle completed and a downtrend forming on the daily chart, the next support level for the GBP/NOK pair could be Friday’s low of 11.69, followed by the November 7 low 11.62.
To the upside, we see last week’s high of 11.85 as an important mid-term resistance level for the pair. As of 7:00 a.m. London time, sterling traded at 11.74 against the krone.
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