GBP/BRL Outlook: Slightly weaker, but likely to move sideways, as the rate is below its recent average and near recent lows without a strong driver to push it significantly.
Key drivers:
- Rate gap: The Bank of England is expected to cut rates further, while the Central Bank of Brazil maintains a high interest rate, supporting the BRL.
- Risk/commodities: Oil prices are trending above average, which typically supports the BRL due to Brazil's reliance on commodity exports.
- One macro factor: Concerns over new US tariffs potentially pushing the UK into recession are dampening GBP strength.
Range: GBP/BRL is likely to drift within its recent range, given the current position near the lows and mixed signals for both currencies.
What could change it:
- Upside risk: A substantial improvement in UK economic data could boost GBP confidence.
- Downside risk: Further escalation in US tariffs affecting UK trade could weaken the GBP even more.
