GBP/PHP Outlook:
The GBP/PHP exchange rate is slightly weaker, trading 1.2% below its recent average and near its recent lows. The outlook suggests that GBP may continue to feel downward pressure from ongoing concerns regarding interest rate cuts.
Key drivers:
• Rate gap: The Bank of England's cautious approach to rates, amidst expectations of a cut, contrasts with the Bangko Sentral ng Pilipinas’ efforts to streamline monetary policy through a growing interest rate swap market.
• Risk/commodities: With global tensions creating risk aversion, investors are gravitating towards safer assets, which can adversely affect the GBP.
• One macro factor: Political instability in the UK, particularly speculation on the Labour party's performance in upcoming elections, contributes to uncertainty around the pound's strength.
Range:
Expect the GBP/PHP rate to drift within the current stable range without testing recent extremes.
What could change it:
• Upside risk: A more robust-than-expected economic performance in the UK could ease fears and support the GBP.
• Downside risk: Further indications of a potential interest rate cut by the Bank of England may deepen the GBP's decline.