The GBP/NOK currency pair extended gains to a 16-week high of 13.6895 on Tuesday ahead of the outcome of the Bank of England’s and Norges Bank’s policy meetings.
The Bank of England is expected to lower its benchmark interest rate by 25 basis points to 3.75% at its December 18th meeting.
In November, the BoE left borrowing costs without change at 4%, while four policy makers voted in favor of a 25 basis point rate cut to 3.75%.
BoE policy makers acknowledged that UK CPI inflation had peaked and underlying disinflation had shown progress.
A subdued economy and rising labor market slack were also factors supporting disinflation, the BoE had said.
Policy makers also noted risks over achieving the 2% inflation target were now more evenly balanced. Persistent inflation has become a lesser concern, while downside risks from weak demand have risen.
In case disinflation continued as anticipated, the bank rate would likely move lower at gradual pace, the BoE had said.
Meanwhile, Norges Bank is expected to leave its key policy rate without change at 4% at its December 18th meeting.
In November, the central bank reiterated that in case the economy developed broadly as projected, the policy rate would likely be reduced further next year.
The GBP/NOK currency pair was last up 0.57% on the day to trade at 13.6455.
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