The current market bias for the GBP to CNY exchange rate is bearish.
Key drivers include the interest rate differential where the Bank of England is expected to implement rate cuts while the People's Bank of China maintains a more stable stance, eyeing gradual monetary easing. The outlook for UK inflation suggests a decline, impacting growth expectations and leading to reduced confidence in the pound. Meanwhile, with China's economy showing signs of resilience, experts predict a potential strengthening of the yuan due to improving trade relations and government support.
The near-term range for GBP to CNY is likely to remain stable, oscillating within the recent average, indicating limited volatility.
Upside risk could arise from a stronger-than-expected economic recovery in the UK, bolstering the pound. Conversely, a significant deterioration in UK fiscal policy or external economic shocks could lead to further declines in GBP value.