GBP/CNY Outlook: Slightly positive, but likely to move sideways as the pair is above its recent average and lacks a clear supporting driver.
Key drivers:
• Rate gap: The Bank of England's cautious policy suggests potential rate cuts, while the People's Bank of China is focused on stabilizing the yuan, affecting their relative strength.
• Risk/commodities: Oil prices are currently supporting the Chinese economy as stability in oil markets bolsters demand for the yuan, impacting GBP/CNY.
• One macro factor: The UK's recent economic warnings about potential US tariffs threaten growth prospects, causing uncertainty around the pound's strength.
Range: The GBP/CNY rate is expected to move within its recent range, holding steady as external pressures balance out.
What could change it:
• Upside risk: A positive surprise in the UK jobs report could strengthen the pound.
• Downside risk: Further escalations in US trade tensions impacting the UK's economy could weaken GBP.