Bias: range-bound, with GBP/CNY trading slightly below the 90-day average and near the middle of the three-month range.
Key drivers:
- Rate gap: The BoE is signaling slower rate cuts than previously priced while the PBOC maintains policy support for the yuan, keeping the pair in a narrow band.
- Risk/commodities: Geopolitical tensions and shifts in risk appetite leave the yuan relatively stable, while GBP remains sensitive to UK data flow.
- Macro factor: China inflation easing gives the PBOC room to maintain a steady stance, underpinning yuan resilience.
Range: Expect GBP/CNY to drift within the recent range, with a tendency to hold near the middle unless data surprise.
What could change it:
- Upside risk: Unexpectedly strong UK data or a delay in further BoE easing could push GBP higher against CNY.
- Downside risk: Additional yuan-supportive policy steps or a broad shift in markets toward risk-off could weigh on GBP.