GBP/BRL Outlook: The exchange rate is likely to move sideways as it trades near its recent average and faces mixed signals from both economies.
Key drivers:
• Rate gap: The Bank of England is expected to maintain current interest rates this month, while Brazil's central bank may cut rates in March, creating varied monetary pressures.
• Risk/commodities: Oil prices have recently increased, which could support the Brazilian economy by boosting exports, impacting the BRL positively.
• One macro factor: The UK's manufacturing growth has shown acceleration, providing some underlying support for the GBP despite broader economic concerns.
Range: GBP/BRL is expected to drift within its recent 3-month range, reflecting a balance of domestic and global factors.
What could change it:
• Upside risk: Stronger economic data from the UK could boost GBP confidence unexpectedly.
• Downside risk: A premature rate cut by the Bank of England could weaken GBP further.