Bias: bullish-to-range-bound, GBP/HUF sits above its 90-day average and near the upper half of the last three months' range.
Key drivers:
- Rate gap: The BoE is expected to ease gradually while Hungary keeps rates high; this evolving yield gap tends to influence carry flows and can cap moves beyond the current range.
- One macro factor: Hungary's inflation remains sticky, with core inflation above target and delaying anticipated rate cuts that would support the forint.
- Global backdrop: the broader FX environment matters; when risk appetite improves, the pound tends to strengthen versus peers, while the forint can benefit if Hungary’s policy stance remains supportive.
Range: The pair is likely to drift within the recent range, with a test of the upper end if demand improves and broader market conditions stay supportive.
What could change it:
- Upside risk: stronger UK data or signals that the BoE will hold rates longer.
- Downside risk: weaker UK data increases bets on earlier BoE rate cuts.