With only eight days to go until the general election, the British pound soared to its highest post-Brexit level against the Norwegian krone. Markets are becoming increasingly confident that Boris Johnson’s Conservative Party will win a majority in the Parliament and deliver on his Brexit promise.
According to latest polls, Corbyn’s Labour Party failed to further narrow the gap to the ruling Tories, and the Royal Bank of Canada now sees a 60% chance of a Conservative win at the elections next week.
Markets are preferring Johnson’s market-friendly policies and the Brexit certainty that comes with a Conservative majority. In contrast, a Labour-led coalition would likely lead to a second Brexit referendum and the nationalizing of industries, including water, railways, the energy sector, and even broadband internet.
Yesterday’s UK Final Services PMI showed a renewed drop in the service sector activity in November, with the pace of decline the fastest since March. The report came in at 49.3, down from the October reading of 50.0 and matching expectations of a 0.1% quarterly economic contraction as a whole.
There are no data reports of note from the UK and Norway today and lower oil prices could put additional selling pressure on the krone throughout the day.
From a technical standpoint, the recent upturn in the GBP/NOK pair looks quite overstretched with the daily RSI forming a bearish divergence between the indicator and the price.
The pair reached the upper channel resistance of a one-month rising channel, which may send the price lower in the short run. Nevertheless, the pair looks well-supported above the 11.90-11.95 range for the time being. As of 7:15 a.m. London time, one British pound bought 12.0170 Norwegian krones.