GBP/CLP Outlook:
The GBP/CLP is slightly positive but likely to move sideways given it is trading 1.7% below its 3-month average, despite being near a 14-day high. Recent political uncertainty in the UK could limit significant upward movement.
Key drivers:
• Rate gap: The Bank of England's dovish outlook for potential rate cuts contrasts with the Chilean central bank's stable interest rate, influencing the rate gap.
• Risk/commodities: Declining confidence in the Chilean mining sector, particularly copper, is putting pressure on the CLP.
• One macro factor: The high inflation rate in Chile could prompt adjustments in monetary policy, affecting the peso's stability.
Range:
The GBP/CLP will likely remain within its recent 3-month range, drifting sideways ahead of potential political developments in the UK.
What could change it:
• Upside risk: Positive developments in the UK by-election results could strengthen the pound.
• Downside risk: A significant U.S. Federal Reserve rate hike could further weaken the peso, impacting GBP/CLP negatively.