GBP/CZK Outlook: Slightly positive, but likely to move sideways as the rate is above its recent average but lacks a strong driver.
Key drivers:
• Rate gap: The Bank of England's cautious approach, with potential rate cuts in 2026, contrasts with the Czech National Bank's steady stance, supporting the koruna's strength.
• Risk/commodities: Current oil prices are stable, which helps mitigate inflation concerns in the UK and supports the Czech economy, potentially influencing both currencies.
• One macro factor: The UK faces economic challenges, including warnings of possible recession due to US tariffs, which could limit GBP appreciation.
Range: Expect GBP/CZK to hold stable within the recent range as both currencies react to ongoing economic risks.
What could change it:
• Upside risk: A surprise improvement in UK economic data could bolster confidence in the pound.
• Downside risk: Any escalation in US tariffs impacting UK trade could worsen the pound's outlook.