GBP/AED Outlook: Slightly positive, but likely to move sideways, as the rate remains above its recent average but lacks strong drivers for further upward movement.
Key drivers:
• Rate gap: The Bank of England is maintaining higher interest rates compared to the Central Bank of the UAE, providing some support for the pound.
• Risk/commodities: The continuing high oil prices may bolster the UAE's economy, which in turn could strengthen the Dirham against the Pound if UAE investors gain more purchasing power.
• One macro factor: Recent UK economic data, including retail sales and PMI figures, have been stronger than expected, which contributes to a cautious optimism for GBP.
Range: GBP/AED is likely to move within its recent range, holding steady as fluctuations are minimal.
What could change it:
• Upside risk: A sudden shift in UK economic data could boost the pound significantly.
• Downside risk: Political uncertainties leading to decreased investor confidence in the UK may weaken the pound.
