GBP/HKD Outlook: The outlook is slightly positive, but likely to move sideways as the rate is above its recent average, yet lacks clear drivers.
Key drivers:
• Rate gap: The Bank of England remains cautious about rate cuts, while the Hong Kong Monetary Authority's interventions have kept rates near zero, widening the differential in favor of GBP.
• Risk/commodities: Global oil prices are currently stable, which supports the overall risk appetite and indirectly benefits GBP against HKD.
• One macro factor: The UK's GDP growth is projected to slow down, affecting long-term confidence in GBP as economic conditions weaken.
Range: GBP/HKD is likely to drift within the recent 3-month range, experiencing only quiet fluctuations.
What could change it:
• Upside risk: Positive economic data from the UK could bolster GBP's strength.
• Downside risk: Further deterioration in UK economic projections may weaken GBP against HKD.