GBP/HUF Outlook: The outlook is likely to move sideways as the rate is near its recent average and within a narrow range.
Key drivers:
- Rate gap: The Bank of England's cautious stance on interest rates contrasts with the National Bank of Hungary's more stable policy, reflecting a different economic recovery pace between the UK and Hungary.
- Risk/commodities: Oil prices are currently below average, which tends to suppress currencies reliant on energy exports, indirectly influencing the HUF as Hungary imports oil.
- One macro factor: UK economic resilience, as shown by strong retail sales, supports the GBP, while declining inflation in Hungary may provide a stabilizing effect on the HUF.
Range: GBP/HUF is expected to drift within the recent stable range, given the lack of compelling new economic data.
What could change it:
- Upside risk: A significant improvement in UK economic indicators could strengthen the pound.
- Downside risk: Renewed political uncertainty in the UK may undermine confidence in the GBP.