The Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate jumped more than 1.50% on Thursday after the Norwegian Central Bank cut interest rates to a record low 1% and hinted that more cuts are on the way.
The Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate was trading in the region of 12.0677 to 12.3299
The decision by Norges bank to cut interest rates by another 0.25 basis points sent the NOK tumbling against its most traded peers. At the meeting policymakers agreed to lower interest rates in an attempt to keep inflation close to its target of 2.5% as the national economy continues to lose momentum. The rate cut was widely expected by economists but they were surprised by the banks comments that further cuts are likely to occur over the coming months.
‘Developments in the Norwegian economy have been slightly weaker than expected and the economic outlook has deteriorated somewhat,’ Oystein Olsen, Norges Bank Governor.
Property Bubble Threat Forecast to Weigh on Norwegian Krone (NOK) Exchange Rate
The rate cut also increased economist concerns over the nation’s housing market, where a housing bubble could form. The market has experienced two decades of almost uninterrupted price growth and is suffering from already high and rising household debt.
‘I am much more worried that we move from an oil boom into an even bigger housing boom that explodes with negative effects. And then we have no tools left, except for fiscal policy, as interest rates are very, very low,’ said Hilde Bjornland, a professor at the Oslo based BI business school.
The Norwegian Krone is forecast to experience movement due to oil price fluctuations and geopolitical events. The next piece of domestic economic data will be next Wednesday’s domestic unemployment data.
Softer-than-Forecast UK Retail Sales Data has little Impact on GBP/NOK Strength
Weaker-than-forecast UK retail sales data did little to weigh on the Pound Sterling to Norwegian Krone exchange rate.
Data released by the London based Office for National Statistics (ONS) showed that UK retail sales increased at a slower rate in May as cooler weather caused consumers to buy less clothing. Economists had been expecting retail sales to remain flat after the strong data seen in April.
Despite the dip, many economists are forecasting that UK retail sales will rally strongly later in the year.
On an annual basis retail sales rose 4.6%, a 26th consecutive month of year-on-year growth.
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