EUR/PKR Outlook: Slightly positive, but likely to move sideways as the rate sits above its recent average, but lacks a distinct driver for further movement.
Key drivers:
• Rate gap: The European Central Bank’s cautious policy contrasts with the State Bank of Pakistan maintaining its key policy rate, creating differing monetary landscapes.
• Risk/commodities: The recent rise in oil prices may support the euro as higher energy costs can translate into greater economic activity in the Eurozone.
• Geopolitical tensions: Escalating tensions in the region are affecting the Pakistani economy, potentially leading to further depreciation of the PKR.
Range: EUR/PKR is expected to drift within its recent range, influenced by ongoing geopolitical factors and economic data releases.
What could change it:
• Upside risk: A significant rebound in German retail sales could boost the euro's strength.
• Downside risk: Continued deterioration in geopolitical relations may pressure the PKR, leading to EUR/PKR declines.
