AED/GBP Outlook:
Bearish, as the rate is below its recent average and near its recent lows, influenced by the current economic uncertainties.
Key drivers:
• Rate gap: The fixed exchange rate peg of the UAE Dirham to the US Dollar provides stability, while the Bank of England's more dovish stance raises uncertainty for the GBP.
• Risk/commodities: With oil prices experiencing recent volatility, the reliance of the UAE's economy on oil revenues influences the Dirham's strength against the GBP.
• One macro factor: The forecasted economic slowdown in the UK, marked by potential rate cuts, could lead to further pressure on the pound.
Range:
Expect the AED/GBP to drift within the recent stable range, but it may test lower levels.
What could change it:
• Upside risk: An unexpected rebound in UK economic indicators may support the GBP.
• Downside risk: A significant drop in global oil prices could weaken the AED’s stability.