GBP, NOK flows: GBP and NOK find mild support from better GDP

UK Q1 GDP has been revised up to 0.7% q/q from the 0.6% originally reported, with particular strength in business investment, up 5.9% q/q and 8.1% y/y. GBP initially rose slightly on the news, but has levelled off and EUR/GBP remains steady at 0.8430/35. The investment numbers will, however, be encouraging from a longer term growth perspective, as weak investment in the UK has often been cited as a reason for relatively weak growth. But increases in capacity will tend to reduce inflationary pressure longer term, so might allow more rate cuts longer term. The data is thus fairly neutral for GBP, and EUR/GBP is likely to remain well supported near 0.84.

Norwegian GDP has also come in stronger than expected, with the mainland measure up 1.0% q/q in Q1. EUR/NOK is nevertheless not much changed near 11.63, but NOK/SEK has pushed up around 20 pips to 0.9380. We continue to see plenty of upside scope for NOK/SEK, with yield spreads remaining favourable and the Norwegian economy solid.