The GBP/NOK currency pair settled below recent high of 13.6898, its strongest level since August 26th, in the wake of the Bank of England’s and Norges Bank’s policy decisions.
The BoE reduced its benchmark interest rate by 25 basis points to 3.75%, in line with broad expectations.
Still, the policy decision revealed significant internal disagreement, with a 5-4 vote on the Monetary Policy Committee. Four members favored keeping the rate unchanged at 4.00%, highlighting ongoing divergence over the appropriate pace of easing.
In its Monetary Policy Summary, the BoE said the scale of any additional rate reductions would depend on how the inflation outlook develops.
The central bank also noted that the overall degree of policy restriction had already lessened following a total of 150 basis points of cuts since August 2024.
While officials still see room for more rate cuts over time, they warned that subsequent decisions on easing were becoming a “closer call.”
Meanwhile, Norges Bank left its key policy rate without change at 4% at its December meeting, in line with market consensus, while indicating no rush to lower rates.
The central bank highlighted that a restrictive monetary policy was still necessary, with inflation above target and underlying inflation hovering near 3% for some time.
While the outlook remains uncertain, the central bank reiterated that in case the economy developed broadly as projected, the policy rate would likely be reduced further next year.
The central bank projects one or two rate cuts in 2026.
The exotic Forex pair gained 0.16% for the week.
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