The GBP to AED exchange rate has recently shown a firm upward trend, trading at 90-day highs near 4.9582. This figure represents a 1.5% increase above its three-month average of 4.8848, within a stable range of 3.7% between 4.7817 and 4.9582. Analysts attribute this strengthening primarily to the Bank of England's recent interest rate decisions, which, despite a rate cut, indicated a more cautious approach to future monetary policy easing.
Following the Bank of England's cut to 4.75% and its acknowledgment that subsequent decisions to ease will be a "closer call," market sentiment around the GBP has improved. Additionally, the release of favorable retail sales figures could provide further support for Sterling in the near term. However, concerns around the UK’s economic outlook persist, notably due to fiscal policy adjustments like the £26 billion tax hike aimed at addressing a fiscal shortfall and a downshift in GDP growth forecasts for 2025.
On the other hand, the UAE Dirham remains stable, influenced by the Central Bank's recent cuts to the base rate, which now stands at 3.90%. While this could lessen borrowing costs and stimulate economic activity, the Dirham's fixed exchange rate regime continues to support its value against the US dollar. The recent announcement regarding the launch of a digital dirham further reflects the UAE's commitment to enhancing its financial infrastructure.
Experts suggest that the interplay between the GBP's potential for moderate appreciation and the AED's resilient stability will likely dictate future movements in the GBP to AED exchange rate. As both currencies navigate through their respective economic landscapes, individuals and businesses involved in international transactions should remain attentive to these macroeconomic indicators.
