On the interbank market, Norway’s Krone keeps getting stronger against the British Pound as the year-end rally increases in magnitude. During the previous trading week, the NOK rate extended its gains against the Pound and settled 11.5422, registering a +0.11% gain. The GBP/NOK exchange rate was seen quoted within a trading range of 11.7015 — 11.5086.
Since the beginning of the year the Nordic currency has been on track to post losses against the British Pound that amount to more than 5%
The trading volume should continue to be on the low side until next year. The major financial centers around the world will continue to offer low trading volume as bank dealers are off for the New Year’s Eve celebration.
In the Nordic country, the domestic currency should continue to consolidate the year-end rally as it draws support from the improved outlook over Norway economy and hints that Norges Bank is ready to hike interest rate mid-2020. At the December’s monetary policy meeting Norges Bank left the benchmark interest rate unaltered at 1.50%.
While in the short-term, interest rates are expected to remain on hold; the probabilities of a rate hike by June 2020 have risen. The general consensus is for a fifth rate increase from 1.50% to 1.75%, after four consecutive interest rate hikes in 2019.
From the other side of the monetary policy spectrum, the Bank of England is more positioned to cut interest rates in 2020 than to increase them. At the latest monetary policy meeting, the BOE kept interest rate on hold at 0.75% with two MP dissidents voting for a rate cut. The Brexit transition period may jeopardize BOE’s efforts to reverse the easing cycle.
The Norwegian 10-year government bond yield was seen quoted at 1.495% in morning trade compared with its previous close of 1.528%.
The pair was seen trading at an exchange rate of 11.5653 and 11.5316 during the early Asia trading hours.