GBP/CNY Outlook: The outlook for GBP/CNY is likely to increase as it trades at 90-day highs and is well above its recent average, supported by a clear influence from global trends.
Key drivers:
• Rate gap: The Bank of England's anticipated rate cuts contrast with the People's Bank of China's (PBOC) efforts to stabilize the yuan, leading to a competitive environment for the GBP.
• Risk/commodities: Recent strength in oil prices has boosted the yuan, positively affecting China's export competitiveness and supporting demand for the CNY.
• One macro factor: China’s recent economic growth momentum has exceeded expectations, alleviating concerns over the impact of global trade tensions on the yuan.
Range: GBP/CNY is likely to test the upper end of its recent range while remaining volatile.
What could change it:
• Upside risk: A significant tightening of UK labor market conditions might bolster the GBP against the CNY.
• Downside risk: Heightened geopolitical tensions or new US tariffs could weigh on the GBP, pulling it lower versus the CNY.