Bias: bearish-to-range-bound, because GBP is below its 90-day average and sits in the lower half of the three-month range.
Key drivers:
- Rate gap: The BoE signals a cautious easing path with more cuts likely this year, while the PBOC keeps liquidity support to stabilise the yuan.
- Macro factor: Chinese policy steps to stabilise the yuan, including offshore yuan issuance; major banks project yuan strength into year-end.
Range: Expect a drift within the recent three-month range, with a tendency to hover near the lower end given the current bias.
What could change it:
- Upside risk: surprisingly strong UK data and a slower pace of BoE easing would support GBP.
- Downside risk: renewed yuan support from the PBOC and softer Chinese data would push CNY higher and push GBP/CNY lower.