EUR/PKR Outlook:
The EUR/PKR rate is likely to decrease as it is currently below its 90-day average and near recent lows. The ongoing geopolitical tensions and rising oil prices are pressuring the euro, impacting its performance against the PKR.
Key drivers:
• Rate gap: The European Central Bank faces challenges with rising energy costs and weakened growth outlook, while the State Bank of Pakistan benefits from improved fiscal discipline and structural reforms.
• Risk/commodities: Higher oil prices are increasing inflation risks and trade imbalances in the Eurozone, negatively affecting the euro's strength.
• One macro factor: Ongoing geopolitical uncertainties, particularly in the Middle East, are weighing on the euro as investors seek safer currencies.
Range:
EUR/PKR is likely to drift within the recent stable range, testing both lower and higher extremes.
What could change it:
• Upside risk: A de-escalation in geopolitical tensions could boost the euro.
• Downside risk: Continued volatility in oil prices may further pressure the euro.
