GBP/HKD Outlook:
The GBP/HKD outlook is slightly positive but likely to move sideways as the rate is above its recent average while being close to 7-day lows. Current economic pressures are reflected in recent UK employment data that have raised concerns over monetary policy.
Key drivers:
• Rate gap: The Bank of England has opted for caution in maintaining its interest rates, which contrasts with the Hong Kong Monetary Authority's recent interventions to stabilize the HKD.
• Risk/commodities: The overall risk-averse climate due to global uncertainties, especially in the geopolitical arena, has led to some downward pressure on GBP while keeping the HKD stable.
• One macro factor: The rising unemployment rate in the UK, reaching a five-year high, could force the Bank of England to reconsider its current stance on interest rates, impacting GBP negatively.
Range:
GBP/HKD is expected to hold within its recent range, given its current position near 10.60, hovering above the 3-month average.
What could change it:
• Upside risk: A surprising improvement in UK inflation figures could support the GBP.
• Downside risk: A confirmed interest rate cut by the Bank of England could apply further pressure on the pound.
