GBP/HKD Outlook:
The GBP/HKD pair is slightly positive and likely to move sideways, trading just above its 3-month average and within a stable range. Current political uncertainties in the UK are keeping the rate in check.
Key drivers:
• Rate gap: The Bank of England's dovish stance on interest rates contrasts with the Hong Kong Monetary Authority's measures to support the HKD.
• Risk/commodities: The ongoing stability in oil prices is not currently pressuring the HKD, contributing to overall market calm.
• One macro factor: The political uncertainty surrounding the UK by-election may persist if the Labour party faces a setback, impacting GBP prices.
Range:
Expect GBP/HKD to hold within its recent range, drifting slightly as local developments unfold.
What could change it:
• Upside risk: A positive outcome in the UK by-election could boost confidence in the Pound.
• Downside risk: Continued political instability could weigh heavily on GBP valuations and lead to declines.