The British pound fell against the Norwegian krone and other major currencies after Prime Minister Johnson moved to block any further Brexit delay beyond the end of 2020, increasing the chances of a no-deal divorce.
Johnson wants to deliver Brexit and ratify a new trade deal with the European Union — similar to the one between Canada and the EU – before the bridging period ends on December 31, 2020.
However, EU leaders have warned that it’s unlikely that the UK and the bloc will be able to finish a trade deal in 11 months. It took seven years to finish the trade deal between the EU and Canada.
The pound opened with a gap to the downside against the krone following the news but managed to pick up some support again after reaching an intraday low of 11.95. As of 7:05 a.m. London time, one pound bought 11.9650 krones.
Sterling had climbed to as high as 12.21 against the Norwegian krone on Friday after Johnson’s Conservative Party won a decisive majority in the UK election, fueling hopes that uncertainties around Brexit would soon be over.
According to the latest Commitment of Traders report that tracks changes in positions in the futures market through last Tuesday, investors reduced their bearish bets by $579 million to take the total short positioning to $1.87 billion — the smallest level since May.
While there are no market reports of note from Norway today, the UK will release the Average Earnings Index for October at 9:30 a.m. London time, with a market forecast of 3.4%. Later today, BoE Governor Carney is due to deliver a speech at the ECB Farewell Board Dinner in Frankfurt.
From a technical standpoint, the pair is trading in a well-defined upwards channel and could try to close the gap with a jump to 12.01 in today’s trade. The pair looks well supported above the 11.90 level.