GBP/PHP Outlook: The outlook is likely to increase, as the rate is significantly above its recent average and near recent highs, driven by strong economic disparities between the UK and the Philippines.
Key drivers:
• Rate gap: The Bank of England is maintaining a cautious approach to interest rates, while the Bangko Sentral ng Pilipinas is expected to cut rates further, widening the differential in favor of GBP.
• Risk/commodities: Oil prices remain above average, which benefits the UK economy more than the Philippines, where high oil prices could exacerbate inflation.
• One macro factor: The UK is facing potential recession risks from new US tariffs, which could dampen GDP growth, yet its economic fundamentals remain stronger than those of the Philippines.
Range: GBP/PHP is likely to hold within the upper part of its recent range, potentially drifting higher, as the market focuses on economic conditions.
What could change it:
• Upside risk: A more robust recovery from the UK could strengthen the pound further.
• Downside risk: Weaker-than-expected economic data from the UK or renewed pressure from US tariffs could push the GBP lower.
