The recent behavior of the GBP to MYR exchange rate has been influenced by various economic factors from both the UK and Malaysia. As of now, GBP is trading at near 30-day highs close to 5.7183, which aligns with its three-month average, having remained stable within a range of 5.6105 to 5.8088.
In the UK, the pound has benefitted from rising producer prices, which have fostered expectations of sustained hawkishness from the Bank of England. The recent positive surge in UK business activity, coupled with a significant increase in inflation to 3.8% in July—its highest in 18 months—has buoyed the pound against other currencies, including the dollar. However, forecasts indicate that the Bank of England may cut interest rates by 25 basis points in November due to the persistent inflation combined with strong economic performance, which could bring some downward pressure on GBP.
Conversely, the Malaysian ringgit has been reacting to a recent cut in the overnight policy rate by Bank Negara Malaysia, marking the first reduction in five years. This was aimed at addressing risks to the Malaysian economy stemming from global trade tensions. Nevertheless, structural reforms and significant foreign exchange reserves—recorded at RM520.7 billion—are expected to support the MYR’s resilience amidst external challenges. The ringgit has also seen support from ongoing trade negotiations with the U.S. aimed at reducing tariffs, which could positively influence its outlook.
Oil prices, a crucial factor for the MYR due to Malaysia's status as an oil exporter, are trading at $68.05, slightly below their three-month average. The highly volatile range of oil prices, moving between $62.78 to $78.85, creates an uncertain backdrop for the MYR, as further fluctuations in oil prices could impact its valuation.
Analysts suggest that with the current GBP strength and the increasing complexities of the economic landscape in both countries, fluctuations in the GBP to MYR exchange rate should be anticipated as new data continues to emerge. As such, businesses and individuals engaged in international transactions may want to monitor these developments closely to optimize their currency conversions.
