GBPNOK

GBPNOK

Overview of GBP NOK

GBP NOK is a cross-pair comprising the British pound sterling as the main currency and the Norwegian krone as the currency quoted. The pair is extremely unpredictable, especially during the European Session. Great Britain’s stable economy has grown manufacturing and service industries. The cost of oil on the international market is claiming a major effect on the pound’s exchange rate. Norway’s economy is focused on exporting raw materials (wood, aluminum), hydrocarbons (oil, gas), and energy. Within this context, the prices for oil and raw materials are important driving factors for the national currency. Public utilities, manufacturing, and tourism are the principal components of the country’s economy.

About GBP

It is the national currency of the United Kingdom, Guernsey, Jersey, and South Georgia. Others include the South Sandwich Islands, the Isle of Man, the British Antarctic Territory, Gibraltar, and Tristan da Cunha. It is divided into 100 pence (a penny in the singular form and it is abbreviated as p). The pound sterling is the oldest regularly used currency. Additionally, some countries that don’t use Sterling have currencies named the Pound. 
Following the U. S. dollar, the euro and the Japanese yen, Sterling is the fourth most exchanged currency on the foreign exchange market. Along with these three currencies and the Chinese yuan, it constitutes a pool of currencies. It measures the worth of IMF exclusive drawing privileges. Sterling is also the fourth most-held reserve currency in global reserves as of 30 September 2019.

What is NOK?

The Norwegian krone (NOK) is the official currency with its management and exchange regulated by the central bank of the country. The Krone’s sign: kr; code: NOK and the plural: Kroner. It is subdivided into 100 ore which only existed electronically since 2012. The name translates as the crown in English. The krone became the world’s thirteenth-most traded currency by value in April 2010, down three places from 2007.
The Norge bank issued a total of eight series of banknotes, including a new 50-krone and 500-krone bills. It replaces the previous 50-krone and 500-krone banknotes that are no longer in use since the 18th of October, 2019.

What is GBPNOK Currency Correlation?

A positive correlation is a relationship between two variables, where both variables shift in the same direction. When one variable decreases as the other variable decreases, or one variable increases. While the other increases, a positive correlation exists. The negative correlation is between two variables, one variable increases as the other decrease and verse versa.

Historical Background of GBP?

The Pound Sterling was commodity money or bank notes backed by silver or gold at various times, but at present, it is fiat money. With its value determined only by its continued acceptance in both the national and international economy. It is the oldest currency still in use in the world and has been in constant use since its inception.
From Anglo-Saxon, Medieval, Tudor to Bretton Woods, the British currency is not new to turmoil. After enjoying a bumpy ride over its 1,200-year existence. The pound suffered one of the toughest days ever since the landmark United Kingdom Referendum to leave the European Union – crashing to a 30 year low. In the days after the result, more than $2. 5 trillion was washed from global asset prices.

Historical Background of NOK?

Before 1875 the Norwegian speciedaler was the official currency of Norway. When Norway joined the Scandinavian Monetary Union in 1875 the speciedaler was dropped in favor of the krone. Other union members comprised of Denmark and Sweden. The monetary union was abolished at the start of World War 1 in 1914, the member countries kept their respective separate currency names.
The krone was used as the gold standard for the Scandinavian Monetary Union, which was equal to 2,490 kroner for one kilogram of gold. This standard was suspended in 1931, but Norway continued to retain the gold reserves of the country.
One krone was equal to 0. 6 Reichsmark during the German occupation, which lasted till 1945. The krone at that time was fixed to the Reichsmark value.
The krone was pegged to the British Pound at a rate of 20 kroner to 1 pound after the Second World War ended. The Norwegian central bank abandoned the fixed exchange rate in 1992. It adopted the floating exchange rate in the early 1990s due to the increased speculation against the Norwegian krone. The decision was necessitated by intensified betting against the krone. It result in losses of nearly two billion kroner on the part of Norges Bank. Up to now the Norwegian central bank is still following the floating exchange rate.

What moves the GBPNOK pair?

When carrying out a fundamental analysis, the impact of the US dollar on both currencies that make up the GBPNOK pair needs to be taken into account. Consider the current characteristics of the United Kingdom and Norway’s economic situation. It is necessary to pay attention to US indicators such as refinancing rate, and unemployment. Others such as the level of business activity, GDP data and inflation should be considered. Taking due account of these factors influencing the British pound’s rate against the Norwegian krone. Applying technical analytical tools, one can trade GBP/NOK pair successfully in the short and medium-term.
 
It is important to understand, economic factors affect all currencies across different countries. Five factors have the greatest effect on all currencies include monetary policy, and market inflation. The others are trust and sentiment, economic growth (GDP) and balance of payments. Use these five general factors as a template. Then you can determine which reports are most important to form a comprehensive view of a currency’s direction.
 
Economic trends, as with all currencies, trigger fluctuations in the Norwegian krone. When the value of the GBP is in question, currency investors can look for the NOK. Increased trading activity at the NOK could increase the exchange rate. Changes in the global crude oil price also influence the value of the NOK, as Norway is the largest oil exporter in Western Europe. The shipping, hydroelectric power, fishing and manufacturing of Norway all contribute to GDP in the region. It is interesting to note however that many industries are owned by the state. Historically, the krone is a prudent investment, and Norway is one of the most stable economies in Europe.

Fundamental Analysis of GBP NOK

Although both currencies are considered an exotic pair, they are safe and supported by a transparent modern economy. The British pound and Norwegian krone are known for their stability and are considered to be the most widely used currencies in Europe. While uncertainty can be beneficial to the economy in the short term. It can have a negative impact on the long-term financial stability of a country and its citizens.
The pair are attractive as the ongoing and rapid Brexit negotiations continue to intensify. The gross domestic product (GDP) growth rate fell by 0. 9% in the first quarter of 2016, falling to 34. 5% from a worse-than-expected 12. 3%. This figure fell deeper in the area of contraction, from 47. 8% to 47% (-8. 7%), and in the area of contraction areas from 32. 0% and 9. 6% respectively.

What type of currency pair is GBPNOK?

You need to know what sort of currency pairing is before you derive the best strategies for trading any currency pair.
They are the most commonly traded major currency pairs. It accounts for almost 80% of the forex market’s trade volume. Cross-currency pairs – crosses – are pairs that do not include the US dollar. Crosses have historically been converted first into USD and then into the desired currency. It is now offered for direct exchange. The exotic currency pairs are currencies with smaller or emerging economies, paired with a Major currency.
Exotics come with more risks for trading than Crosses and Majors. This is as a result of, they are less liquid, more volatile, and more susceptible to manipulation. The currency pair GBP NOK is an exotic pair. They do include larger spreads, which are more prone to abrupt changes in political and financial developments.

What are the best trading strategies for Beginners to trade GBP NOK?

We recognized the fact that GBP NOK is an exotic pair of currencies. Before trading exotic currency pairs, there are two main things you need to be aware of: They tend to be more volatile and less liquid than the majors. Volatility for a given security or market index is a statistical measure of the dispersion of returns. The higher the volatility, the riskier the security will be in most cases. Liquidity, on the other hand, refers to how easy it is to convert an asset or security into ready cash without affecting its market price.
 
On the forex market, there are several trading strategies that are effective. It is applied to exotic currency pairs that are more volatile and less liquid than large pairs. For the purpose of this, we highlighted three that may be useful to you when trading exotic currencies. These are trend trading, breakout trading and target trading.
 
Trend trading- is a style of trading that attempts to capture gains by analysing the momentum of an asset in a particular direction. When the price moves in one direction overall, like up or down, that’s called a trend. Trend traders find themselves in a long place when a defence moves upwards. Low swing lows and higher swing highs mark an uptrend. Trend traders may opt to move into a short position when an asset is lower in trend.
 
Breakout trading- is based on a combination of both technical and fundamental analysis. It capitalize on the price movements of an asset once it breaks through a historic support or resistance level. Ascending and descending triangles, pennants, and wedges are the most popular chart patterns to use during a breakout. When trading using a breakout strategy, one thing to remember is that there is a risk that a breakout could be a fake breakout.
Target trading- is a technique in which a trader recognizes over-bought and over-sold areas (or areas of support and resistance). Purchases in the over-sold area (support) and sells in the over-bought area (resistance). The strategy works well in markets that meander with no discernible long-term trend up and down.

FAQ's

Changing interest rates used a primary interest rate in the economy, called the bank rate, to do so. Typically, if the Bank Rate increases, so do the pound’s strength. This is because, in the UK, higher interest rates lead investors to demand more pounds compared to other currencies.

The pound was boosted after a story at that time. After Brexit, the DUP said, the main political party in Northern Ireland, was prepared to abide by some European laws.

The surprise result of the UK’s 2016 Brexit Referendum sent British pound sterling (GBP) valuations into chaos. With the actual vote count coming in at 51. 9% for “Leave” against 48. 1% for “remain,” the U.K. Voting electorate expressed their approval of withdrawal from the European Union. After the referendum, it was apparent that both the United Kingdom and Pound Sterling were in a new age. And GBP officially began its new journey on another set of tumultuous experience.

It is fuelled by exports of oil and gas which not only makes it’s economy extremely competitive and stable. Also allows it to become one of the richest countries for many years to come.

The best alternative for several is an ETF or an exchange-traded fund. Such funds offer a fast and convenient way to invest in the currency market, which requires returns dependent on krone performance versus dollar performance.

The best times to trade these instruments center around key economic releases at 1:30 a.m., 2 a.m., 8:30 a.m., and to 10 a. m. A. S. Eastern Time, as well as between midnight and noon, when all cross markets are kept active and highly liquid by European and American exchanges.

 

When we say a certain currency is strong, we don’t assume that it has a high value in the first place. What we say then is that it is a stable store of value without any unexpected volatility in valuation and without excessive inflation.
The Norwegian krone as such is relatively a solid currency. For decades, it has had consistently low to normal inflation. It never had hyper-inflation, have a reliable and well-respected central bank. The krone is issued by a government that is fiscally accountable and has very solid finance.
However, on the other side, Norway is a small nation with just 5 million people. The economy has a very large petroleum industry which makes the Krone vulnerable to major oil price fluctuations to a degree.

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