Bias: The outlook for AED/GBP is bullish-to-range-bound, as the pair is currently above its 90-day average and in the upper half of the 3-month range.
Key drivers:
• Rate gap: The stable monetary policy of the UAE's central bank, aligned with the US Federal Reserve, supports the Dirham while the Bank of England’s potential rate cuts create downward pressure on the Pound.
• Risk/commodities: With oil prices remaining volatile but generally strong, this bolsters demand for the AED due to the UAE's reliance on oil revenue.
• One macro factor: UK GDP growth is projected to slow, leading to concerns over economic performance and affecting the Pound's resilience.
Range: The AED/GBP pair is likely to hold its ground within the recent range, with possible minor fluctuations around current levels.
What could change it:
• Upside risk: A stronger global oil market could enhance the AED’s position.
• Downside risk: Any unexpected worsening of UK economic projections could further weaken the GBP against the AED.