GBP/AED Outlook: The outlook for GBP/AED is slightly positive, but likely to move sideways, given it is above its recent average while lacking a clear driver for further gains.
Key drivers:
• Rate gap: The Bank of England's cautious interest rate policy supports the pound against the more stable UAE Dirham from its central bank.
• Risk/commodities: The recent volatility in oil prices will influence the AED, as the UAE economy heavily relies on oil exports.
• One macro factor: UK retail sales and PMI figures have surpassed expectations, which has improved the economic outlook for the pound.
Range: GBP/AED is likely to drift within it, maintaining stability near current levels without clear momentum to test extremes.
What could change it:
• Upside risk: A significant improvement in UK economic indicators could enhance confidence in GBP.
• Downside risk: Political uncertainty in the UK, especially surrounding upcoming local elections, could weigh on the pound.
