Bias: The GBP/HUF is currently bullish-to-range-bound, as it is slightly above the 90-day average and in the upper half of its 3-month range.
Key drivers:
- Rate gap: The Bank of England's cautious stance on cutting interest rates contrasts with the Hungarian central bank's maintained higher rates to combat ongoing inflation, benefiting the HUF.
- Risk/commodities: With oil prices experiencing stability, the Hungarian Forint has seen some strength, as lower energy costs may ease inflation pressures in Hungary.
- Economic outlook: The UK's projected slower GDP growth and looming fiscal challenges may limit the Pound's upside potential.
Range: The GBP/HUF is likely to drift within its recent range, influenced by external market movements rather than specific domestic data.
What could change it:
- Upside risk: A surprising improvement in UK economic data could bolster the Pound.
- Downside risk: Further inflation concerns in Hungary leading to tighter monetary policy could strengthen the Forint against the Pound.