The GBP/AED exchange rate currently holds a bullish bias as the pound strengthens amidst recent Bank of England policy signals.
The interest rate differential remains a key driver, with the Bank of England expected to ease rates slowly, while the UAE’s stable growth and positive economic outlook support the Dirham. Additionally, the UAE’s projected GDP growth at 5.3% in 2026 boosts confidence in the AED, contrasting with slower growth forecasts for the UK. Recent retail sales figures from the UK, anticipated to show growth, may further bolster the pound.
In the near term, the GBP/AED is expected to trade within a stable range, reflecting current market levels.
Potential upside risk includes stronger-than-expected retail sales in the UK, which could increase confidence in the pound. A downside risk may arise from any rapid cuts in UK interest rates prompted by worsening inflation or growth concerns, which would pressure the GBP against the AED.
