Market Update – GBP / NOK
Sterling has done well in January after bouncing from support just above 9.000 early in the month. The pound has been helped in part by hawkish comments from Bank of England policy maker Andrew Sentance, prompting markets to start bringing forward expectations of a possible interest rate hike in the UK. Sterling’s tailwind was further bolstered by talk of a +0.4% figure for fourth quarter GDP, but the figure came in at just 0.1% yesterday, confirming that the country pulled out of recession at the end of 2009, but only by the finest of margins. Sterling reversed the session’s earlier gains on the news, but appears to be getting over that “blip” this morning.
The Krone has been on the back foot as a sharp correction in oil prices impacted the value of the oil rich nation’s exports over recent weeks. This came after the currency rallied in late December after the central bank raised interest rates by 0.25% to 1.75%. That level is well above the rates available in the UK and Euro zone, a factor which could help the Krone remain well bid over the coming months, especially if Norges bank make further rate hikes and oil stabilises after recent falls.
We are approaching key technical resistance at 9.5300. A daily close above there would be a significant positive development for sterling, opening the way for a further rally toward 9.95 in due course.
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