GBP/HUF Outlook:
The GBP/HUF exchange rate is likely to decrease, as it is currently trading below its recent average and near recent lows. Current political uncertainty in the UK is weighing on the British Pound.
Key drivers:
• Rate gap: The Bank of England is signaling possible interest rate cuts amidst easing inflation, contrasting with Hungary's central bank maintaining higher rates to tackle persistent core inflation.
• Risk/commodities: Declining global oil prices may affect economic growth, which can create further pressure on the GBP.
• One macro factor: The UK's economic growth forecast is declining, with slower growth anticipated for 2026 due to weak household purchasing power and decreased business investment.
Range:
Expect GBP/HUF to test the lower end of its recent range, with possible stability near current levels.
What could change it:
• Upside risk: A surprising solid performance in the UK by-election could boost GBP confidence.
• Downside risk: A negative outcome in the by-election may increase selling pressure on the GBP.