GBP/CNY Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average without a clear driving factor.
Key drivers:
• Rate gap: The Bank of England’s cautious approach contrasts with the People’s Bank of China’s aggressive monetary easing, keeping GBP somewhat well-supported.
• Risk/commodities: The Chinese yuan is strengthening amid a recovering economy and significant government stimulus while the market notes a weak oil price trend could influence both currencies.
• One macro factor: Persistent inflation in the UK may limit interest rate cuts, potentially benefiting the pound's value.
Range: GBP/CNY is likely to hold within its recent range, reflecting stability but lacking strong momentum.
What could change it:
• Upside risk: A surprise announcement from the Bank of England regarding interest rates could increase the pound's strength.
• Downside risk: Any significant deterioration in UK or Chinese economic data could weaken GBP against CNY.