GBP/HKD Outlook:
The GBP/HKD rate is slightly positive, but likely to move sideways as it trades just above the three-month average and lacks a clear driver to push significantly higher or lower.
Key drivers:
- Rate gap: The Bank of England's cautious approach contrasts with the Hong Kong Monetary Authority's active interventions, maintaining stability in the HKD.
- Risk/commodities: Global oil prices have been fluctuating, which typically influences broader market risk, affecting GBP and HKD indirectly as traders react to geopolitical uncertainties.
- One macro factor: Recent political uncertainties in the UK, especially around potential Labour losses in upcoming elections, contribute to the downward pressure on the GBP.
Range:
The GBP/HKD is expected to hold within its recent range, given the current stability around its average level.
What could change it:
- Upside risk: A surprise increase in UK retail sales data could bolster GBP, easing rate cut concerns.
- Downside risk: Further confirmation of expected interest rate cuts by the Bank of England could increase selling pressure on GBP.