GBP/CZK Outlook: Likely to increase, supported by stronger economic performance in the UK as it trades above its recent average and near recent highs.
Key drivers:
• Rate gap: The Bank of England's cautious approach towards interest rates contrasts with the Czech National Bank's stable monetary policy, benefiting GBP.
• Risk/commodities: Oil prices have shown volatility lately; if they rise, the Czech economy could feel pressure due to higher import costs, affecting the koruna negatively.
• One macro factor: UK retail sales and PMI figures exceeded expectations, enhancing the overall economic outlook for the pound, which may boost its value against the koruna.
Range: GBP/CZK is expected to hold within its recent range, with the possibility of testing the higher extremes.
What could change it:
• Upside risk: A sudden improvement in global risk appetite could further strengthen the pound.
• Downside risk: Renewed political uncertainty in the UK ahead of local elections might impact investor confidence in GBP.