The current market bias for the GBP to ILS exchange rate is bearish. A key driver influencing this outlook is the anticipated interest rate cuts from the Bank of England, which is expected to lower rates to 3.25% by mid-2026 as inflation decreases. Conversely, the strength of the Israeli New Shekel (ILS) is supported by a robust economic forecast and reduced geopolitical risks, allowing it to appreciate against the dollar. Additionally, indications of slow economic growth in the UK are adding pressure on the GBP.
Over the next 1–3 months, the expected trading range for GBP to ILS is likely to remain stable, reflecting a cautious approach around the current levels. Upside risks to this outlook could develop if the Bank of England signals a more hawkish stance than expected. Downside risks include continued strengthening of the ILS if Israel's economic recovery outpaces the UK’s. The current exchange rate of 4.2781 is only slightly below its three-month average, showing a range-bound scenario amidst these influences.
