GBP/PKR Outlook: Slightly positive, but likely to move sideways as the rate is above its recent average and lacks a strong directional driver.
Key drivers:
• Rate gap: The Bank of England's cautious approach supports the GBP, while the State Bank of Pakistan is maintaining its policy rate due to inflation concerns, keeping the PKR under pressure.
• Risk/commodities: The PKR has been appreciating against the USD for 80 consecutive days, indicating improved market confidence that could benefit overall sentiment.
• One macro factor: Recent robust UK retail sales and PMI figures suggest economic resilience, which may prevent significant downward pressure on the GBP.
Range: The GBP/PKR is likely to drift within its recent range, showing limited volatility given the recent movements.
What could change it:
• Upside risk: Stronger-than-expected UK economic indicators could bolster the GBP and lead to further gains.
• Downside risk: Increased political uncertainty in the UK ahead of local elections could pressure the GBP lower, impacting exchange rates.