GBP/AED Outlook:
The GBP/AED exchange rate is slightly positive but likely to move sideways, as it trades above its recent average and is near recent highs. However, a lack of clear positive drivers could limit significant upward movement.
Key drivers:
- Rate gap: The Bank of England is indicating lower interest rates, which may weaken the GBP relative to the stable monetary policy of the UAE Central Bank.
- Risk/commodities: Oil prices remain steady, supporting the value of the UAE Dirham due to its connection to the economy.
- Political uncertainty: Ongoing political issues in the UK, especially with leadership changes, are creating volatility in the currency markets.
Range:
Expect the GBP/AED rate to hold in its recent range, potentially drifting rather than testing the extremes.
What could change it:
- Upside risk: Stronger-than-expected economic data from the UK could bolster confidence in the GBP.
- Downside risk: Continued political turmoil in the UK may lead to more pressure on the GBP.
