Bias: bullish-to-range-bound, because GBP/HKD sits above its 90-day average and in the upper half of the three-month range.
Key drivers:
- Rate gap: BoE is expected to ease gradually in 2026 while HKMA keeps defending the HKD peg, letting USD strength drive the cross-rate; for traders this keeps GBP exposed to USD moves and HKD pressure.
- Inflation trend: UK inflation is easing toward the BoE target, supporting a softer path and helping GBP resist declines, though surprises remain and policy signals can shift.
- HKD peg dynamics: HKD peg dynamics? HKMA interventions and the resulting rate differentials keep HKD vulnerable to USD moves, shaping GBP/HKD and keeping ranges uneven.
Range: Range: likely to drift within the recent three-month band through the coming weeks, testing the lower end if USD strengthens and the upper end otherwise.
What could change it:
- Upside risk: Upside risk: UK inflation proves stickier than expected, delaying rate cuts and giving GBP a further edge.
- Downside risk: Downside risk: renewed HKD pressure or a stronger USD move could push the pair toward the lower end.
