GBP/CNY Outlook:
The outlook for GBP/CNY is likely to decrease as the rate is currently below its recent average and near recent lows. The recent UK employment data has put pressure on the British Pound, suggesting a continued downtrend.
Key drivers:
• Rate gap: The Bank of England is expected to ease rates, while the People's Bank of China is focused on stabilizing the Yuan, which may widen the gap.
• Risk/commodities: Oil prices have remained stable, influencing global economic conditions that could affect the GBP's performance against the yuan.
• One macro factor: The UK's rising unemployment and potential cooling inflation could lead to further cuts in interest rates, impacting the GBP negatively.
Range:
GBP/CNY is likely to drift within its recent range, as consistent pressure keeps it from testing higher extremes.
What could change it:
• Upside risk: A surprising boost in UK economic data could shift expectations about the BoE's rate cuts.
• Downside risk: Continued deterioration in UK economic indicators, alongside stable strength in the Yuan, could push the rate even lower.
