GBP/NOK settles above 2 1/2-week low, posts weekly loss

The GBP/NOK currency pair settled above Friday’s low of 13.6506, its weakest level since June 24th, after data showed the UK economy had shrunk for a second straight month in May, which added to expectations that the Bank of England could cut interest rates next month.

UK GDP contracted 0.1% month-on-month in May, following a 0.3% contraction in April. The latest figure confounded market expectations of 0.1% growth.

Markets are now pricing in a 78% chance of a 25 basis point interest rate cut by the BoE in August, compared to 64% chance two weeks ago.

Meanwhile, the latest data out of Norway showed that annual consumer price inflation had steadied at 3% in June – at its highest level since February.

Norway’s annual inflation adjusted for tax changes and excluding energy products (CPI-ATE) accelerated to 3.1% in June from 2.8% in May.

The GBP/NOK currency pair settled 0.04% lower at 13.6765 on Friday.

The exotic Forex pair lost 0.55% for the week.