The GBP/NOK currency pair eased from a 6-week high of 13.1268 on Tuesday, as a rebound in oil prices provided support to the Krone ahead of the outcome of Norges Bank’s policy meeting.
The oil rebound came amid growing concerns over supply disruptions as tensions in the Middle East intensify and the risk of broader regional conflict increases.
Market sentiment is being driven by fears that attacks on critical energy infrastructure could escalate, particularly as US-aligned Gulf states move closer to direct participation in the ongoing Iran conflict.
Norges Bank is expected to leave its key policy rate without change at 4% at its March 26th meeting.
Norway’s annual inflation has remained well above Norges Bank’s target, which suggests a restrictive monetary policy is still necessary.
Yet, in January, the central bank said interest rates could be lowered later in 2026, in case the economy evolves as projected.
Meanwhile, investors reassessed the Bank of England’s policy trajectory after a notably more hawkish message from the central bank.
Although the BoE opted to leave interest rates unchanged last week, its communication was perceived as more hawkish than markets had anticipated. Policy makers underscored that they would respond if inflation pressures intensify, with particular attention on the impact of higher global energy prices.
This stance prompted an adjustment in UK interest rate expectations. Market participants began to factor in the prospect of several rate hikes, while some investors speculated that the BoE could implement as many as three hikes should elevated inflation persist.
The GBP/NOK currency pair was last down 0.26% on the day to trade at 13.0515.
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