GBP/CLP Outlook:
The GBP/CLP is slightly weaker, but likely to move sideways as the rate is currently below its recent average and near recent lows. The lack of strong directional drivers suggests limited movement.
Key drivers:
• Rate gap: The Bank of England has held interest rates steady, while the Chilean Central Bank maintains a higher rate, creating pressure on the GBP relative to the CLP.
• Risk/commodities: Concerns over the mining sector, particularly copper production, have hurt the CLP, but volatility in oil markets adds uncertainty overall.
• One macro factor: Recent inflation data in Chile showed a greater-than-expected increase, raising concerns about potential adjustments in the Central Bank's monetary policy.
Range:
GBP/CLP is likely to drift within its recent 3-month range as market signals are mixed.
What could change it:
• Upside risk: A stronger-than-expected jobs report in the UK could bolster the GBP.
• Downside risk: Further deterioration in the mining sector in Chile could lead to additional pressure on the CLP.