GBP/CNY Outlook: Slightly weaker, but likely to move sideways as the rate is below its recent average and trading rangebound.
Key drivers:
• Rate gap: The Bank of England's cautious approach to rate cuts contrasts with the People's Bank of China's active support for the yuan, impacting their relative strengths.
• Risk/commodities: With ongoing global trade tensions and volatility in oil prices, the UK's export activity is likely to remain subdued, affecting the pound’s performance.
• One macro factor: The UK GDP growth is projected to slow further, contributing to a challenging economic outlook for the pound as wage growth also declines.
Range: GBP/CNY is expected to hold steady within its recent range, influenced by mixed economic signals from both currencies.
What could change it:
• Upside risk: A sudden resolution to US tariffs could boost GBP.
• Downside risk: Continued weakening in the UK's economic indicators may further pressure the pound.