GBP/CNY Outlook:
The GBP/CNY exchange rate is slightly positive but likely to move sideways as it trades just below its recent average within the mid-range. Lack of clear drivers is keeping the currency pair stable.
Key drivers:
- Rate gap: The Bank of England's cautious stance on interest rates contrasts with the People's Bank of China's focus on stabilizing the yuan, impacting GBP/CNY dynamics.
- Risk/commodities: Oil prices remain stable, which has generally supported both currencies; however, global economic uncertainties keep investors cautious.
- One macro factor: Stronger-than-expected UK retail sales and PMI data may have provided some support for the GBP, yet political risks in the UK could limit its gains.
Range:
GBP/CNY is expected to drift within the recent 3-month range, with limited movement in either direction.
What could change it:
- Upside risk: A significant improvement in UK economic data or governance could boost the pound.
- Downside risk: Heightened global tensions or adverse political developments in the UK could weaken GBP further.