The current bias for the GBP to HKD exchange rate is bullish. The Bank of England’s (BoE) signals of potentially slower interest rate cuts have contributed to the pound’s strength. Influential factors include the interest rate differential, as the BoE’s projected cuts to rates will likely occur at a slower pace compared to the anticipated cautious rate cuts by the Federal Reserve. The release of improved UK retail sales figures could further support the pound. Additionally, inflation is projected to stabilize, which usually supports currency strength.
In the near term, the GBP to HKD exchange rate is expected to trade within an established range, at recent highs, maintaining a relatively stable pattern observed over the past three months. Upside risks could arise if the UK economy shows stronger growth than anticipated, while a downside risk may come from renewed fiscal concerns in the UK that could prompt faster rate cuts, adversely affecting the pound.
