The current market bias for the AED to GBP exchange rate is bearish. Key drivers include the interest rate differential, as the Bank of England has signaled future rate cuts while the UAE’s economy is projected to grow, bolstering the AED. Additionally, the UK's inflation forecast indicates a downward trend, likely affecting the GBP negatively.
Over the near term, the exchange rate is expected to remain within a stable range, reflecting a narrow band around current levels. Recent data shows the AED at 0.2022, which is 1.2% below its three-month average of 0.2047, with movements limited to a 3.7% range in recent weeks.
Upside risks could emerge from stronger UK retail sales, potentially boosting the GBP. Conversely, unexpected economic challenges or worsening UK fiscal policies may exert further downward pressure on the GBP, influencing the AED/GBP exchange rate dynamics.