GBP/AED Outlook:
The GBP/AED exchange rate is likely to move sideways, as it is currently near its 3-month average, showing limited upward or downward pressure amid mixed economic signals.
Key drivers:
- Rate gap: The Bank of England has hinted at a dovish approach, which may lead to lower interest rates, contrasting with the UAE Central Bank's stable monetary policy focused on currency pegs.
- Risk/commodities: Oil prices are stabilizing, which indirectly supports both currencies, but any significant fluctuation could shift their relative values.
- One macro factor: UK economic growth is projected to slow, which raises concerns about the pound's strength against the dirham.
Range:
The GBP/AED is expected to hold steady within its recent stable trading range.
What could change it:
- Upside risk: A sudden improvement in UK economic data or unexpected BoE policy changes could boost the pound.
- Downside risk: Continued political instability or signs of sharp economic decline in the UK may weaken the pound further.
