GBP/AED Outlook:
Slightly positive, but likely to move sideways, as the rate is above its recent average without a clear driver.
Key drivers:
• Rate gap: The Bank of England's recent decision to hold rates steady contrasts with the UAE's fixed policy linked to US Federal Reserve moves.
• Risk/commodities: With oil prices remaining steady, the Dirham's value is well supported, ensuring limited volatility.
• One macro factor: The UK faces mixed economic indicators, including solid retail sales growth, though inflation pressure remains a concern.
Range:
GBP/AED is expected to drift within its recent range, likely consolidating rather than testing extremes given current market conditions.
What could change it:
• Upside risk: A positive shift in Bank of England policy guidance could uplift the pound.
• Downside risk: Political uncertainty in the UK could further weigh on sterling's value.
