The British pound extended its losses against the Norwegian krone for the fourth consecutive day after both the BoE and Norges Bank held their monetary policy meetings yesterday.
As widely expected, both central banks held interest rates unchanged, but the Bank of England’s dovish tone pushed the pound significantly lower against other major currencies.
The Bank of England kept rates unchanged at 0.75% with a 7-2 split vote in favour of holding rates steady. However, the GDP growth forecast in the fourth quarter was lowered to just 0.1% from the previous 0.2%, reflecting a series of weak economic data coming from the UK in the recent period.
In addition, the bank commented that a rate cut may be on the table if global growth fails to stabilize or uncertainties around Brexit remain elevated. On the positive side, a Phase One trade deal between the US and China could provide some support for the UK economy, although the labour market has started to show signs of loosening.
In Norway, the country’s central kept rates steady at 1.5% after raising rates to a total of 75 basis points in 2019. The bank said inflation is close to the target and that a continued krone depreciation would provide further inflationary pressures. Governor Olsen also added that “the policy rate will most likely remain at the current level in the coming period.”
Following the BoE meeting, the pound initially pushed higher against the krone but gave back gains during the New York session to reach an intraday low of 11.6554. As of 7:00 a.m. London time, one pound bought 11.6940 Norwegian krones.
The pair reached an important support level on the daily chart that aligns with the November 8 low. A decisive break below yesterday’s low could lead to further losses in sterling.