GBP/CNY Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average with no clear driving momentum.
Key drivers:
• Rate gap: The Bank of England is expected to be cautious with further rate cuts, while the People's Bank of China is actively supporting the yuan, indicating a widening gap in monetary policy.
• Risk/commodities: Oil prices remain steady, which could limit significant shifts in currencies; mixed trends in commodities may weigh on the exchange rate.
• One macro factor: China's economy is showing signs of improvement thanks to government stimulus, which supports the yuan’s outlook.
Range: GBP/CNY is likely to drift within its recent range, given the limited economic data and mixed signals from both economies.
What could change it:
• Upside risk: A sharper-than-expected recovery in UK economic data could drive the pound higher.
• Downside risk: Renewed geopolitical tensions or negative trade developments could hinder GBP performance against the yuan.
