GBP/HUF Outlook: Slightly positive, but likely to move sideways, as the rate is near its average and lacks a clear upward driver.
Key drivers:
• Rate gap: The Bank of England has indicated that further rate cuts may be on the horizon, while the National Bank of Hungary is maintaining its higher interest rates due to persistent inflation.
• Risk/commodities: Recent concerns over US tariffs have created uncertainty, potentially affecting the UK economy, while energy prices remain volatile, impacting the Forint.
• One macro factor: Hungary's inflation was lower than expected, although core inflation pressures could delay interest rate cuts, affecting the HUF.
Range: Movement is likely to drift within the recent 3.5% range, reflecting the current stable market conditions.
What could change it:
• Upside risk: A significant improvement in UK economic data could help lift the pound.
• Downside risk: Further escalations in trade tensions or negative UK economic forecasts could pressure the pound lower.
