GBP/ILS Outlook:
The GBP/ILS rate is currently below its 90-day average and near recent lows, leading to a likelihood of a decrease in the near term. Market signals indicate conflicting pressures, primarily from economic developments in both the UK and Israel.
Key drivers:
- Rate gap: The Bank of England is holding rates steady while the Bank of Israel has recently cut rates, creating a widening interest rate differential that favors the ILS.
- Risk/commodities: With geopolitical tensions affecting risk appetite, there is increased demand for stable currencies like the ILS, as the shekel recently reached a 30-year high against the US dollar.
- One macro factor: Persistent inflation in the UK at 3.6% creates uncertainty for the GBP, influencing the central bank's cautious monetary policy.
Range:
The GBP/ILS is likely to drift within the recent stable range as it adjusts to ongoing economic signals.
What could change it:
- Upside risk: A significant improvement in UK retail activity could bolster the pound.
- Downside risk: Further cuts to interest rates by the Bank of Israel may strengthen the shekel against the pound.
