GBP/BRL Outlook: Slightly positive, but likely to move sideways as GBP is near its recent average and lacks a clear driver for movement.
Key drivers:
• Rate gap: The Bank of England is expected to keep interest rates steady, while the Central Bank of Brazil is preparing for gradual rate cuts, indicating divergent monetary policies.
• Risk/commodities: Oil prices are currently above their average, which usually benefits the Brazilian Real, but the overall impact remains uncertain as BRL struggles with local economic challenges.
• One macro factor: Recent UK retail sales and PMI figures have improved, which might lend some support to the GBP, despite the absence of major indicators in the coming days.
Range: GBP/BRL is likely to remain within its recent trading range, with potential for slight movements either way.
What could change it:
• Upside risk: A significant improvement in the UK's economic outlook or stronger consumer data could boost the GBP.
• Downside risk: Increased political volatility in Brazil or unexpected changes to fiscal policy could negatively affect the BRL.
