The current market bias for GBP to AED is range-bound. Key drivers include:
- The Bank of England is expected to cut interest rates, which may place downward pressure on the GBP as it adjusts to lower inflation forecasts. This contrasts with the stability in UAE interest rates, which can support the AED.
- Economic growth forecasts in the UK are slowing, with growth projected at 1.2% in 2026, influencing the Pound's strength against the Dirham.
- In contrast, strong economic growth in the UAE, projected at 5.3% for 2026, is likely to bolster the Dirham against the Pound.
The GBP to AED exchange rate is expected to trade within a stable range over the next few months, reflecting current volatility levels. Upside risks include unexpected UK economic resilience that could strengthen the Pound. Conversely, a downturn in retail sales or further signs of economic weakness in the UK could weigh on the GBP, pushing it lower against the AED.