GBP/AED Outlook: The outlook for the GBP/AED pair is slightly positive, but likely to move sideways, as it is above its recent average and lacks a clear driving force.
Key drivers:
• Rate gap: The Bank of England is expected to cut rates in the future, while the Central Bank of the UAE maintains a stable monetary policy aligned with the US.
• Risk/commodities: Lower oil prices may affect the UAE's economic momentum, but the Dirham remains stable due to its dollar peg.
• One macro factor: The UK's GDP growth is anticipated to slow, which could weigh on the pound in the longer term.
Range: The GBP/AED is likely to hold within its recent range as it trades above its average level without strong directional cues.
What could change it:
• Upside risk: A surprise increase in UK economic data could boost the pound.
• Downside risk: Renewed geopolitical tensions could lead to a flight to safe-haven assets, negatively impacting GBP.
