GBP/PHP Outlook: Slightly positive, but likely to move sideways as the rate is above its recent average but lacks a clear driver for further movement.
Key drivers:
• Rate gap: The Bank of England's cautious approach to interest rates contrasts with the Bangko Sentral ng Pilipinas's potential rate cuts, supporting the pound against the peso.
• Risk/commodities: The Philippine peso has weakened significantly, reflecting broader economic concerns, while the British pound remains buoyed by better-than-expected UK retail sales and PMI figures.
• One macro factor: Persistent inflation in the UK, remaining around 3.4%, is likely to support the pound by limiting rate cuts from the BoE.
Range: GBP/PHP is expected to hold within its recent stable range, showing limited movement.
What could change it:
• Upside risk: A surprising improvement in UK economic data could strengthen the pound further.
• Downside risk: Increased speculation regarding further peso depreciation could pressurize the GBP/PHP exchange rate.