GBP/CNY Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver for significant movement.
Key drivers:
• Rate gap: The Bank of England's cautious stance on interest rate cuts contrasts with the People's Bank of China's (PBOC) interventions to stabilize the yuan, impacting currency dynamics.
• Risk/commodities: Recent volatility in oil prices, with a slight upward trend, is supporting the yuan's relative strength against the pound, though global uncertainties remain.
• One macro factor: The UK's sluggish GDP growth and reduced public spending are dampening the pound, while China's economy shows signs of recovery, aided by government stimulus measures.
Range: GBP/CNY is expected to drift within its recent range, reflecting limited volatility.
What could change it:
• Upside risk: A stronger-than-expected UK jobs report could boost the pound.
• Downside risk: Heightened global trade tensions or further US tariffs could negatively impact the GBP.
