GBP to NOK forecast: but or sell GBP/NOK currency pair
09:57, 18 December 2019
Considered an “exotic pair” due to the relative infrequency, the British pound (GBP) and the Norwegian krone (NOK) values are both intricately linked to the European Union and supported by highly developed economies. This does decrease the relative risk to fluctuations in comparison to other exotic pairs which frequently involve at least one developing country.
Both the UK and Norwegian economies are tied to trade with the EU as well as the most common pairing by volume for each being EUR/GBP and EUR/NOK. However, the economies of the two countries are affected by different overlying factors and this makes the Pound vs NOK currency pair a unique and attractive option for currency traders.
In the GBP/NOK, pairing, the GBP is considered the base currency and the NOK the quote currency. The latest GBP to NOK price rate as of December 18, 2019, was 11.834, meaning that one GBP will buy 11.834 NOK.
GBP to NOK forecast
While both countries are greatly affected by the economy of the European Union there is no question that the most pressing factors to consider when evaluating the GBP to NOK forecast are the UK election and ongoing Brexit negotiations.
The Boris Johnson's Conservative party has secured a majority during the UK general election and this will contribute to a strengthening of the GBP. The Conservative Party is viewed as friendlier to trade and commerce than the Labour Party. It is also a widely held belief that the Conservative Party will more quickly negotiate the requirements for smooth UK exit from the EU.
The most recent economic figures out of Norway show a higher than predicted unemployment rate and lower than expected growth. While the economy of Norway is strong, and the government continues to support social programs with a massive petroleum investment fund the krone continues to fall relative to major world currencies. The krone is the 3rd worst performing global currency for highly developed/stable economies in 2019 and has frustrated numerous analysts with its continued slide.
This decrease in the value of the NOK and the momentum of the GBP has continued steadily in the last quarter of 2019. The GBP/NOK forecast exchange rate has increased 10.5% so far in 2019 and without any major surprises out of the UK this growth seems poised to continue well into 2020.
The Pound has been steadily gaining compared with almost all major global currencies and has reached the all-important threshold of 1.30 to the USD, seemingly poised to break through this structural barrier and continue growth. The GBP/NOK recently surpassed pre-Brexit levels on the wave of this steady increase in the GBP.
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What you need to know about GBP/NOK currency pair
While the British Pound is considered a global currency and is the fourth most frequently traded, political transparency means the Krone consistently ranks in the top 15. The economy of Norway is relatively small when compared to that of the UK and is highly dependent on global petroleum markets.
Oil and gas account for Norway’s largest export and as such the krone and the economy are linked to global oil markets. Global trade disputes such as the ongoing saga between the US and China tend to cause uncertainty and higher oil prices. While this uncertainty can be beneficial for the economy in the near term, it does lead to uneasiness in the NOK as a long-term currency investment.
Why GBP/NOK is attractive to forex traders?
Although considered an “exotic pair”, both currencies are secure and supported by transparent modern economies. The British pound and the Norwegian krone are known for stability and are considered two of the strongest and most frequently used currencies in Europe, outside of the Euro itself. The GBP/NOK pair is particularly attractive now due to the potential gain in the GBP rate and the potential for continued strengthening with quick Brexit negotiations.
GBP/NOK: buy or sell?
Most analysts currently consider this pair a buy to strong buy. The results of the UK general election drive the GBP price higher. The NOK, while far from a freefall, is regarded as steady at best and likely decreasing slightly on worse than expected.
According to GovCapital, the GBP/NOK price is predicted at 19.933 (6.574%) in a one-year period.
Amid the global trade uncertainty, investors in the Pound vs NOK should be prepared for downswings in the value of the British Pound vs Norwegian Krone if there is a strong increase in the price of oil. Political uncertainty in the Middle East or further attacks on infrastructure similar to the recent attacks in Saudi Arabia could push the krone higher in the short term. Investors should keep a diligent eye on world oil markets as any long-term structural changes could change the current buy to strong buy GBP/NOK prediction.
As with all currency markets there is always the option to buy contracts for difference (CFDs) to profit from downturns in the current market. Currency investors should remain vigilant and consider CFDs in the wake of any unexpected market reversal or change in the GBP to NOK forecast.