The GBP/NOK currency pair extended losses on Friday, as political and monetary policy factors in the United Kingdom contributed to Sterling’s softness.
Sentiment has been dented following a surprise result in the Gorton and Denton by-election. According to the Guardian, the Green Party secured a landmark win, dealing what is described as a significant setback to Keir Starmer. Hannah Spencer captured the seat from Labour, marking the Greens’ first-ever Westminster by-election victory.
The defeat for Labour raises the prospect of leadership speculation, which could further undermine confidence in the Sterling. Heightened political noise often prompts investors to demand a higher risk premium for UK assets, adding to the downward bias in GBP.
On the monetary policy front, prospects of further rate cuts by the Bank of England continue to weigh on the Sterling. Market participants are factoring in the possibility of a rate cut as early as March amid signs of a cooling labor market and easing inflation pressures.
Headline annual inflation has slowed to 3.0% in January from 3.4% in December. However, services inflation, a key gauge of domestically driven price pressures, has eased only slightly to 4.4% from 4.5%.
Some members of the Monetary Policy Committee, including Alan Taylor, have indicated that two to three rate cuts may be warranted in the near term, while still acknowledging lingering risks linked to services inflation.
The GBP/NOK currency pair was last down 0.47% on the day to trade at 12.8192.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
