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GBP/NOK | Price Forecast and Trading Outlook

Sam Boughedda trader
Updated 31 Jan 2025

The GBP/NOK currency pair represents the value of the British pound sterling compared to the Norwegian krone. The pair is a less commonly traded cross-currency pair. However, the Norwegian krone is influenced by movements in the energy markets, as oil and gas account for Norway’s largest export.

Furthermore, the pair is also shaped by factors such as interest rate differentials, energy market dynamics (particularly oil and gas prices), and macroeconomic policies in the UK and Norway. The krone is often sensitive to fluctuations in crude oil prices. However, the country has the Government Pension Fund Global, which was established to shield the economy from ups and downs in oil revenue. It also acts as a financial reserve and as a long-term savings plan.

Meanwhile, the pound reacts more broadly to global risk sentiment and UK-centric developments. 

GBPNOK Performance & Price Chart

More specifically, the price dynamics of GBP/NOK are driven by monetary policy decisions from the Bank of England (BoE) and Norges Bank, as well as broader economic indicators such as inflation, GDP growth, and employment figures. Additionally, oil price movements are a key driver for the krone and can amplify the pair’s volatility.

While the pair has experienced some swings in 2024, it has mostly moved higher after a strong pullback in December 2023. 

Last year, GBP/NOK ended up approximately 10.7% YTD.

TimeframePerformance
3 Months+1.08%
6 Months+6.43%
Year-to-Date+10.69%
1 Year+10.02%

Other Currency Pairs

GBPNOK Forecast

Forex.com senior market analyst Fiona Cincotta said in a recent 2025 forecast that the UK economy is expected to continue to grow in 2025. However, she noted that “GDP could be weaker than the 1.5% forecast by the BoE owing to several key factors, including uncertainty surrounding trade and a less expansionary UK budget.” This would, of course, have a negative impact on the pound. 

Just ahead of the 2024 Christmas holiday, Nordea senior macro and FX strategist Sara Midtgaard said they “see a risk of a weaker NOK the coming week since Norwegian pension funds and insurance companies need to sell NOK in order to maintain their FX hedge ratio.” Meanwhile, back in September, ING stated they felt Norges Bank may have to give in to the pressure to ease rates. They have yet to do so. ING also noted that the NOK continued to sell off despite short and medium term bullish drivers. 

Bullish GBP Argument: Overall, proponents of a stronger GBP/NOK will generally point to the BoE’s ongoing battle with inflation, which rose in the latest data and led to the central bank maintaining interest rates at current levels in its latest decision. Many analysts also expect the UK economy to perform better next year. 

Bullish NOK Argument: However, bullish NOK traders/investors may also note that Norway’s interest rates remain elevated and with the BoE potentially cutting in 2025 and Norges Bank remaining firm, there could be an interest rate differential set to come into play. Furthermore, any stabilisation or rebound in crude oil prices could strengthen the krone, narrowing the pair’s upside potential. Looking ahead, Trading Economics forecasts the GBPNOK to be priced at 14.1467 in one year.

Our View: While the pair has trended higher in 2024, future movements will likely hinge on oil price stability and the relative pace of rate adjustments by the BoE and Norges Bank, as well as the performance of the UK economy amid various potential headwinds. Overall, we see the potential for a turnaround in the pair over the medium-term.

Trading the GBP/NOK

The GBP/NOK offers unique opportunities for traders and analysts due to its sensitivity to energy markets and monetary policy shifts. Those trading the currency pair should:

Have a Clear Bias: If you want to trade the GBPNOK, it is important you have a clear reason to be bullish or bearish on the pair, whether that be based on fundamental or technical analysis.

Assess Energy Market: As the NOK is heavily influenced by oil price trends, given Norway’s reliance on crude exports, traders should note the potential impact on their position if they trade the pair.

Assess the Macro Factors: Both bullish and bearish traders should assess how each economy may impact their position in the short, medium, and long term.

Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples. 
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