GBP/AED Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The Bank of England's recent dovish stance contrasts with the UAE's stable monetary policy linked to the US dollar, which could affect GBP's performance against AED.
• Risk/commodities: Global oil prices remain volatile, impacting the UAE Dirham’s strength and its ability to maintain the currency peg with the US dollar.
• One macro factor: Mixed indicators from the UK, including retail sales growth and inflation, create uncertainty for GBP investors ahead of upcoming GDP figures.
Range:
Expect GBP/AED to hold within its recent range as there are no strong signals indicating a definitive break in either direction.
What could change it:
• Upside risk: A surprising increase in UK GDP could strengthen the pound.
• Downside risk: Continued political uncertainty or negative economic indicators from the UK could weigh on the GBP.