The GBP to PKR exchange rate currently stands at 369.7, reflecting a 2.1% decline compared to its three-month average of 377.7. This rangebound trading has seen the pound fluctuate between 366.3 and 386.1. Analysts are noting a broad caution among investors due to uncertainties surrounding the upcoming UK budget, scheduled for November 26. Recent forecasts indicate that this budget may involve potential tax hikes and interest rate cuts, contributing to a bearish sentiment toward the GBP.
Concerns over the UK’s fiscal situation are amplified by the Office for Budget Responsibility (OBR) anticipating a budget shortfall of £20 billion, exacerbated by a projected downward revision in productivity forecasts. As a result, there is heightened speculation about a potential interest rate cut by the Bank of England (BoE), particularly after recent inflation figures have suggested a need for policy adjustment. Forecasters expect that sluggish private sector growth and stagnant retail sales data, anticipated in the forthcoming Purchasing Managers' Index (PMI) reports, will further pressure the pound.
In contrast, the Pakistani Rupee (PKR) faces distinct challenges, primarily stemming from increasing geopolitical tensions that have led to a 12% depreciation against the US dollar this year. While remittances have surged, boosting reserves, the overall sentiment regarding the PKR remains cautious. An agreement with the International Monetary Fund (IMF) has provided some support, leading to a slight appreciation, but interventions from the State Bank of Pakistan to bolster the currency have created artificial demand, complicating market dynamics.
Experts are indicating that the combination of the UK’s fiscal troubles and the PKR's sensitivity to external economic and political pressures will continue to shape the GBP/PKR exchange rate in the near term. As investors monitor these developments, the outlook remains mixed, with potential for further GBP weakness and fluctuating PKR performance as geopolitical and economic factors evolve.
