Bias: Bullish-to-range-bound, as GBP is currently above the 90-day average and in the upper half of the 3-month range.
Key drivers:
• Rate gap: The Bank of England has indicated a cautious approach to rate cuts, while Bank Indonesia recently lowered its benchmark rate, which may weaken the IDR.
• Risk/commodities: Oil prices have trended above average, supporting the GBP against risk-sensitive currencies like the IDR.
• One macro factor: Indonesia's economy is showing resilience with strong manufacturing activity, but challenges like weak foreign inflows may pressure the IDR.
Range: GBP/IDR is likely to hold within its recent range, with potential for minor fluctuations as broader market movements influence the rate.
What could change it:
• Upside risk: A shift towards more aggressive monetary policy adjustments by the Bank of England could bolster the GBP.
• Downside risk: Continued geopolitical tensions could undermine investor confidence in the GBP, leading to a pullback against the IDR.