GBP/CZK Outlook:
Slightly weaker, but likely to move sideways as the rate is near recent lows and just above its 90-day average with mixed drivers.
Key drivers:
• Rate gap: The Bank of England’s dovish stance contrasts with the Czech National Bank's steady rate, potentially benefiting the CZK.
• Risk/commodities: Current oil trends do not suggest significant volatility, which could stabilize both currencies.
• One macro factor: UBS's adjustment of its EUR/CZK forecast indicates easing inflation pressures in the Czech Republic, strengthening the koruna's outlook.
Range:
Expect GBP/CZK to hold within its recent 3-month range, drifting slightly as both currencies respond to domestic developments.
What could change it:
• Upside risk: A sudden increase in UK economic data could restore confidence in the GBP.
• Downside risk: Continued political instability in the UK could further undermine the pound.