Cyclone less likely to form off NT

It is looking less likely a Category 1 cyclone will develop off the coast of the Northern Territory, but wild weather continues to lash the region.

A low-pressure system above the Northern Territory is likely to form into a cyclone on Boxing Day. (AAP)

A Boxing Day cyclone is looking less likely to form off the Northern Territory, but the wild weather is "near enough" on Christmas Day.

The Bureau of Meteorology says the low-pressure system, which had been forecast to move southeast and form into a cyclone over the Gulf of Carpentaria this weekend, has instead looped back to settle over the Top End.

Forecaster Angeline Prasad says the storm has been unpredictable since the cyclone watch was issued for the southwest Gulf on Thursday.

"It hasn't behaved well in the last 24 hours," she told AAP.

"The model guidance on this particular low-pressure system has been terrible, at the least."

Ms Prasad said the system would remain where it was or push east into the gulf on Saturday afternoon and form into a Category 1 cyclone.

"It's still a fairly warm, deep system," she said, causing wild weather all over the Top End.

The eastern side was being particularly pummelled by severe thunderstorms, heavy rainfalls of up to 300mm in some areas, flash flooding, heavy surf and strong to gale-force winds with gusts of up to 90km/h.

"Although we actually don't actually have a cyclone it's near enough," Ms Prasad said.

A cyclone watch issued for the coast from Port Roper to the Queensland border, including Groote Eylandt, was still current on Friday afternoon.