Thursday’s trade saw GBP/NOK within the range 11.5478-11.6400. The pair closed 0.71% lower at 11.5478 to mark its steepest single-day loss since December 23rd following mixed macro data and amid uncertainty whether Britain and the EU will reach an agreement on trade by the end of 2020.
NOK received strong support after NIMA/DNB Markets reported that Norway’s Manufacturing PMI had surged to a nine-month high of 55.5 in December from a revised up 53.8 in November.
Norway’s Krone was also boosted by higher oil prices amid indications of improving US-China trade relations and heightened tensions in the Middle East.
The pair remained under pressure after UK manufacturing industry contraction was reported to have deepened in December, with the respective PMI coming in at a final 47.5, down from 48.9 in November. Production shrank the most since July 2012, while incoming new work decreased for the eighth straight month, because of ongoing concerns over economic, political and global trade prospects.
“At the moment there is still significant uncertainty about the macroeconomic direction over the next few months and so we expect the pound could be more sensitive to data releases going forward,” Lee Hardman, currency analyst at MUFG, said.
Today market players will consider another set of macro data. At 7:00 GMT Statistics Norway will release its unemployment report for October. The rate of unemployment was reported at 3.9% in September, or the highest since October 2018. The number of unemployed persons rose by 8 000 to 110 000, while the number of employed persons rose by 12 000 to 2.736 million in September. The rate has remained below the long-term average of 4.19% since July 2017.
Low unemployment suggests higher consumer spending and good prospects for economic growth. Yet, way too low unemployment rates could lead to higher rates of increase in wages and, thus, bolster inflation, which in turn could cause the economy to overheat. Unemployment rates between 4% and 6% are usually regarded as healthy for an economy.
Meanwhile, activity in the United Kingdom’s construction industry probably contracted for an eighth consecutive month in December, with the respective Purchasing Managers’ Index coming in at a reading of 45.9, according to expectations. In November, the index stood at 45.3, indicating the slowest drop in construction output since July, as housing activity decreased at a much slower rate. In case the PMI improved more than anticipated in December, this would have a moderate bullish effect on GBP. The IHS Markit/CIPS will release the official report at 9:30 GMT.
A separate report by Bank of England at 9:30 GMT may show UK consumer lending slowed to GBP 1.0 billion in November, according to expectations, from GBP 1.326 billion in October. The latter has been the highest level of consumer lending since February, as credit card lending rose 0.5% month-over-month and other loans rose 0.6%.
Additionally, mortgage lending probably slowed to GBP 3.9 billion in November from GBP 4.321 billion in October. The latter has been the highest level of mortgage lending since July.
GBP/NOK was edging down 0.09% to 11.5376 in late Asian session on Friday.
