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The British pound continued Friday’s slide against the Norwegian krone with the start of the trading week, falling around 0.21% during the Asian session.
While the pound remains the best performing currency among majors in the past month on hopes of a Conservative majority after the general election, a “no-deal” Brexit could still be on the table if the election outcome delivers a hung parliament.
Since a disorderly Brexit has been largely priced out of the markets, any signs of a potential hung parliament could increase market concerns and significantly weigh on sterling.
Meanwhile, Boris Johnson unveiled a 59-page manifesto on Sunday in an attempt to extend his lead in the final weeks of the campaign. In the manifesto, he promised lower taxes for working people, extra 50,000 nurses for the National Health Service, and to get Brexit done by January 31.
The latest CoT report showed that market sentiment on the British pound is slowly turning bearish again. Large market participants who meet the reporting threshold have increased their bearish bets on sterling by $319 million through last Tuesday, taking the total short positions to $2,58 billion.
The Norwegian krone looks supported by higher energy prices, with Brent crude up around 0.10% this morning.
From a technical standpoint, the krone is posed to extend its gains against sterling after markets rejected prices above the 61.8% Fib level and the horizontal resistance in the 11.84-85 range.
To the downside, the November 15 low of 11.69 acts as a short-term support zone, followed by the November 7 low of 11.62. As of 7:07 a.m. London time, the krone traded at 11.7440 against the British pound.
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