AED/GBP Outlook:
Bearish, as the rate is below its recent average and near recent lows.
Key drivers:
• Rate gap: The UAE Dirham's stability is supported by its peg to the US Dollar, while the British Pound faces pressure from the Bank of England's steady interest rates and mixed economic signals.
• Risk/commodities: Recent fluctuations in oil prices could affect the UAE's foreign reserves, which are vital for maintaining the Dirham's peg, potentially weakening it against the Pound.
• One macro factor: Concerns around UK political stability and a cautious approach from the Bank of England are contributing to the bearish tone for the Pound.
Range:
Expect the AED/GBP pair to drift within its recent range, unable to test extremes.
What could change it:
• Upside risk: A sudden rise in oil prices could bolster the Dirham’s strength against the Pound.
• Downside risk: Further dovish signals from the Bank of England could strengthen the Pound against the Dirham.