GBP/AED Outlook: Slightly positive, but likely to move sideways as the rate remains above its recent average and lacks a clear driving force.
Key drivers:
• Rate gap: The Bank of England's stance on holding interest rates contrasts with the UAE's stable monetary policy, keeping the Dirham steady.
• Risk/commodities: Oil prices have been relatively stable, which supports the UAE economy, maintaining the Dirham's strength against the Pound.
• One macro factor: Concerns about potential Bank of England rate cuts in the future could weigh on the Pound as inflation trends downwards.
Range: Expect GBP/AED to drift within its recent 3-month range, supported by current economic conditions.
What could change it:
• Upside risk: A surprise rate hike by the Bank of England, driven by stronger-than-expected UK economic data, could boost the Pound.
• Downside risk: Further signs of UK economic slowdown or confirmation of anticipated rate cuts by the Bank of England may weaken the Pound against the Dirham.