GBP/BRL Outlook:
Bearish, with the rate currently below its 90-day average and near recent lows.
Key drivers:
• Rate gap: The Bank of England's more dovish stance contrasts with the Central Bank of Brazil's steady interest rates, which supports the BRL.
• Risk/commodities: With oil prices at recent highs, strong demand can help bolster the BRL by improving export revenues.
• One macro factor: The UK retail sales growth can’t offset the pressures from the Bank of England's anticipated rate cuts, which could weaken the GBP further.
Range:
Expect GBP/BRL to hold near recent lows, potentially moving sideways within its recent range.
What could change it:
• Upside risk: A surprising rise in UK GDP data could reignite interest in the GBP.
• Downside risk: Continued political uncertainty in the UK may further diminish confidence in the GBP, pushing the rate lower.