GBP/CNY Outlook:
The outlook for GBP/CNY is likely to decrease as the rate is currently trading significantly below its recent average and near recent lows. Pressure from UK political uncertainty and a dovish monetary policy from the Bank of England is contributing to this decline.
Key drivers:
• Rate gap: The Bank of England is hinting at possible interest rate cuts while the People's Bank of China is focused on stabilizing the yuan, favoring CNY over GBP for now.
• Risk/commodities: Oil prices have recently stabilized, which may impact economic conditions differently in the UK and China, possibly affecting the GBP's strength against the CNY as global economic recovery remains uncertain.
• One macro factor: Continued political turmoil in the UK, especially concerning leadership issues, is likely to weigh on the British Pound.
Range:
Expect GBP/CNY to drift within its recent range as it remains near its 90-day lows.
What could change it:
• Upside risk: Any positive shift in UK political stability could strengthen the GBP.
• Downside risk: Further negative news about UK economic forecasts or leadership could push the GBP lower.
