GBP/NOK: Sterling Erases Election Gains Against Krone as Johnson Revives No-Deal Risk

Sterling continued to erase its post-election gains against the Norwegian krone for the third consecutive day after Boris Johnson announced his plan to stick to a 2020 Brexit transition period, bringing the risk of a no-deal divorce with the European Union back on the table.

The pound surged to multi-year highs against other major currencies after the Conservative Party won an overwhelming majority at the UK elections last week, allowing Johnson to push his Brexit deal through the Parliament and get Brexit done by January 31.

This triggers a transition period during which the UK and the European Union would be negotiating their future relations in trade, politics, security, and other fields.

Initially, the transition phase could be prolonged by as long as two years, but Johnson seems determined to reach an agreement — similar to the trade deal between Canada and the EU – by the end of 2020.

Markets are worried this one-year period could be too short to reach a deal, given that talks between Canada and the bloc took around seven years to complete.

The currency markets had a quite rude awakening following the news, with the pound losing as much as 3.2% against the krone since the Friday high of 12.21. As of 7:10 a.m. London time, the GBP/NOK pair traded at 11.84.

Today, markets will eye the UK CPI report for November, which is expected to show a slowdown in consumer prices to 1.4% y/y. The release is scheduled for 9:30 a.m.
Tomorrow, Norges Bank is expected to keep its key policy rate unchanged at 1.5% after two rate hikes in the last six months.

From a technical standpoint, the GBP/NOK pair reached the 61.8% Fib level measured from the November 8 close to the December 10 close which could provide some buying pressure in the pound. The RSI is forming a hidden bullish divergence on the back of the pair’s strong down-move in the last two days. is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.