GBP/HKD Outlook: Slightly positive, but likely to move sideways as the rate is above the recent average yet lacks a clear driver.
Key drivers:
- Rate gap: The Bank of England is expected to maintain current interest rates while the Hong Kong Monetary Authority continues defending the currency peg, leading to a mixed outlook for both currencies.
- Risk/commodities: As oil prices remain volatile, shifts in global demand could impact both currencies, particularly the HKD due to its ties with the US dollar.
- One macro factor: UK inflation is projected to decrease, which may prompt the Bank of England to consider rate cuts in the future, affecting GBP.
Range: GBP/HKD is likely to hold within the recent range, showing stability but limited upward momentum as investors await further economic signals.
What could change it:
- Upside risk: A surprise announcement from the Bank of England indicating a more hawkish stance on interest rates could boost GBP.
- Downside risk: Weak economic data from the UK, especially related to manufacturing growth, could exert downward pressure on GBP.