The GBP/HUF trading outlook is currently bullish-to-range-bound, as the pair is slightly above the 90-day average and in the upper half of the 3-month range.
Key drivers:
- Rate gap: The Bank of England's cautious approach to interest rate cuts contrasts with the National Bank of Hungary maintaining higher rates due to ongoing inflation pressures.
- Risk/commodities: Oil prices are currently above average, which could support the GBP as the UK economy remains sensitive to shifts in energy costs.
- Geopolitical risks: Ongoing global tensions, particularly related to US-China dynamics, may influence investor behavior, leaning towards more stable currencies like the GBP.
Range: The GBP/HUF may hold steady within the recent range, with potential to test the upper levels in response to new market developments.
What could change it:
- Upside risk: A stronger-than-expected economic recovery in the UK could lead to tightening monetary policy, supporting the GBP.
- Downside risk: A significant worsening of Hungary's inflation outlook could lead to a large drop in the HUF, shifting the balance in favor of the GBP.