GBP/HKD Outlook:
The GBP/HKD pair is likely to increase as it currently trades above its recent average and is near recent highs. This trend is supported by ongoing interventions from the Hong Kong Monetary Authority to stabilize the HKD.
Key drivers:
• Rate gap: The Bank of England's dovish stance on interest rates contrasts with the Hong Kong Monetary Authority's efforts to strengthen the HKD, widening the rate gap in GBP's favor.
• Risk/commodities: Oil prices are relatively stable, providing less volatility that could otherwise impact the GBP negatively due to its connections with energy markets.
• One macro factor: Political uncertainty surrounding the UK, particularly regarding changes in leadership, has added to the hesitation in GBP trading, affecting overall market confidence.
Range:
The GBP/HKD is expected to hold within its recent range, drifting slightly higher but not likely testing extreme levels soon.
What could change it:
• Upside risk: An unexpected increase in UK economic data could spur further GBP gains.
• Downside risk: Any escalation in UK political turmoil might lead to increased selling pressure on GBP.
