GBP/CNY Outlook:
The GBP/CNY exchange rate is likely to move sideways as it is trading near its recent average and within a stable range. A lack of clear driver for upward or downward movement is observed.
Key drivers:
• Rate gap: The Bank of England has maintained interest rates steady while the People's Bank of China has a framework to stabilize the yuan, influencing their relative values.
• Risk/commodities: Current geopolitical tensions have led to increased risk aversion, prompting traders to seek safer currencies, affecting the GBP.
• One macro factor: The upcoming UK jobs report is critical, as signs of labor market weakness could add downward pressure on the pound.
Range:
With the rate recently holding near its 3-month average, fluctuations are expected to stay within the established 3.7% range.
What could change it:
• Upside risk: Strong UK economic data may boost the pound.
• Downside risk: Poor jobs data could lead to further GBP weakness.