GBP/CNY Outlook: Slightly positive, but likely to move sideways as it is just above its recent average, lacking a clear driver for significant movement.
Key drivers:
• Rate gap: The Bank of England's recent dovish hold on interest rates contrasts with the People's Bank of China's more accommodative stance, including recent rate cuts to support economic growth.
• Risk/commodities: With oil prices stabilizing, related concerns might indirectly influence the GBP's strength against the CNY, but the overall impact appears muted at this time.
• One macro factor: Recent Chinese government stimulus efforts have bolstered economic growth, contributing to a firmer yuan.
Range: GBP/CNY is expected to hold steady within its recent range, as current levels show stability above the average.
What could change it:
• Upside risk: A positive shift in UK economic indicators, such as robust retail sales or stronger GDP growth, could lift the GBP.
• Downside risk: Continued uncertainty in UK political leadership or additional dovish signals from the BoE may weaken the pound further.