The GBP to HUF exchange rate is currently experiencing significant pressures as the British Pound (GBP) struggles against a backdrop of slowing growth and fiscal uncertainties. Recent GDP figures from the UK indicated only 0.1% growth in the third quarter, leading analysts to heighten expectations for an interest rate cut by the Bank of England (BoE) in December. This potential decision may diminish the currency’s appeal, causing further declines.
Investor sentiment around the GBP has soured in anticipation of the upcoming UK budget on November 26, amid concerns of tax hikes and anticipated interest rate cuts. The Pound has already fallen to 90-day lows near 435.3 against the Hungarian Forint (HUF), which is 2.9% lower than its 3-month average of 448.1. Analysts note this recent decline reflects fears of ongoing fiscal shortfalls and economic challenges within the UK, evidenced by the anticipated £20 billion budget gap expected from the Office for Budget Responsibility's downward revision of productivity forecasts.
Conversely, the HUF exhibits a more robust performance, having recently reached its strongest levels against the Euro in 18 months due to stable monetary policy from the National Bank of Hungary (NBH) and attractive interest rates. The NBH has maintained its base rate at 6.5%, which continues to draw investor interest and bolster the currency despite ongoing inflation risks. This environment of relative strength for the Forint, accompanied by Hungary's persistent current account surplus, provides support as GBP to HUF trades in a stable range between 435.3 and 460.1.
Overall, the consensus among economists suggests that GBP could remain under pressure as market participants await further fiscal signals and economic data. The divergence in monetary policies between the UK and Hungary is likely to continue influencing the exchange rate dynamics, particularly as the BoE and NBH navigate their respective monetary strategies.