GBP/HUF Outlook:
Bearish, as the rate is below its recent average and near recent lows, pressured by domestic UK political uncertainty.
Key drivers:
• Rate gap: The Bank of England's cautious stance and the potential for a rate cut contrast with the Hungarian National Bank maintaining higher rates, which strengthens the HUF.
• Risk/commodities: With oil prices remaining volatile, the potential impacts could influence the HUF due to Hungary's energy reliance.
• One macro factor: Ongoing UK political tensions, particularly concerning Prime Minister Keir Starmer, are creating instability around the GBP.
Range:
The GBP/HUF is likely to drift within its recent range, as the current pressures limit upward movements in the near term.
What could change it:
• Upside risk: A surprising shift in UK political stability could restore confidence in the GBP.
• Downside risk: Further political turmoil or a negative shift in economic data from the UK could push the GBP even lower.
