EUR/NOK likely to trade around 9.30 by end-2018 – Lloyds Bank

The euro had reached its highest level against the Norwegian krone since the financial crisis at the end of 2017, coming close to 10.00. But the turn of the year has seen a stall in momentum, as EUR/NOK has dropped back towards 9.50. This is greatly due to data-driven and monetary policy developments, noted Lloyds Bank in a research report.

Economic data in Europe for the first quarter disappointed, with the economic growth rising by just 0.4 percent sequentially. But, with inflation surprising to the upside, the ECB might decide to begin the process of normalizing monetary conditions in 2018. The Norwegian economy has bolstered noticeably through the first quarter. Growth rose sharply, from -0.3 percent to 0.6 percent on a sequential basis, with inflation coming above the central bank’s new target of 2 percent. With this, there is a strong case of tightening of the policy.

“Should the prevailing trends extend, EUR/NOK is likely to face further downward pressure over the coming months. We favour the currency pair to end the year around 9.30”, added Lloyds Bank.