GBP/HUF Outlook:
The GBP/HUF pair is likely to increase as it trades near 14-day highs, just slightly below its recent average. A supportive driver is the expectations for UK inflation to rise, which reinforces the likelihood of the Bank of England maintaining higher interest rates.
Key drivers:
• Rate gap: The Bank of England is under pressure to keep rates higher amid inflation concerns, while the Hungarian National Bank recently cut rates, widening the gap favoring GBP.
• Risk/commodities: Rising energy prices due to geopolitical tensions could push inflation higher in the UK, possibly leading to a stronger GBP.
• One macro factor: The upcoming Spring Statement from Chancellor Rachel Reeves may include revised growth forecasts, offering potential support for Sterling.
Range:
GBP/HUF is expected to hold within its recent range of 429.7 to 447.3, with potential to test the upper limits.
What could change it:
• Upside risk: A stronger-than-expected response to the Spring Statement that reassures GBP investors.
• Downside risk: Escalation in geopolitical tensions decreasing investor risk appetite, leading to a stronger HUF.
