Bias: bearish-to-range-bound, since GBP/CLP is below its 90-day average and in the lower half of the 3-month range, keeping a tilted stance.
Key drivers:
- Rate gap: Bank of England is seen easing gradually, while the Chilean central bank moved to a lower policy rate, narrowing the gap and weighing on GBP against CLP; investors expect a cautious path.
- Risk/commodities: Copper prices firm, supporting Chilean export revenue and the peso, helping CLP.
- One macro factor: Chile’s Kast victory and reform plans have boosted peso.
Range: drift within the 3-month range, with occasional tests of the lower end and brief pauses near the middle, before a possible move as data arrives.
What could change it:
- Upside risk: stronger-than-expected UK data, delaying BoE rate cuts and lifting GBP, particularly if services inflation remains stubborn.
- Downside risk: UK inflation cools faster than expected, prompting quicker BoE easing and weaker pound, especially if energy costs stay tame and liquidity conditions ease.