The GBP to HUF exchange rate has recently faced significant downward pressure, trading at 90-day lows near 435.3 HUF per pound. This marked a 3.0% decline from its three-month average of 448.6 HUF, amidst a stable trading range between 435.3 and 460.1 HUF, reflecting ongoing market concerns.
The British Pound (GBP) has been weighed down by disappointing economic data, including a mere 0.1% growth in the UK’s GDP for the third quarter, which has fueled speculation regarding potential interest rate cuts by the Bank of England (BoE) in December. Analysts indicate that these adverse developments are leading to a bearish outlook for the GBP, particularly as the UK prepares for its autumn budget amidst looming fiscal challenges. Reports suggest that the Office for Budget Responsibility could revise productivity forecasts downward, potentially resulting in a substantial budget shortfall that heightens concerns over the UK’s economic stability.
Furthermore, the sentiment around the GBP has turned increasingly negative as it struggles against other major currencies, hitting multi-month lows against the US dollar and lows not seen in years against the Euro. The shifting expectations surrounding UK monetary policy are exacerbating these vulnerabilities, with a sense of uncertainty compounded by anticipated fiscal measures in the upcoming budget.
Conversely, the Hungarian Forint (HUF) has shown resilience, spurred by the National Bank of Hungary’s maintenance of a high interest rate of 6.5%, which remains the highest in the European Union. This stability in rates, aligned with a steady annual inflation rate of 4.2% and a current account surplus, has positively influenced investor sentiment towards the HUF, contributing to its recent appreciation against the Euro.
Additionally, commentary from Hungary’s Prime Minister Viktor Orban regarding euro adoption has reinforced a sense of national economic strategy that diverges from broader EU integration, further impacting investor views on the forint.
Overall, the GBP's weaker fundamental backdrop combined with the HUF's relative strength suggests that the GBP to HUF exchange rate could face continued downward pressure unless there are significant positive shifts in either currency’s economic indicators or monetary policy outlooks.
