GBP/RUB Outlook:
The GBP/RUB exchange rate is slightly weaker, but likely to move sideways. Currently trading below its 90-day average, the pair has experienced volatility, with several factors impacting its trajectory.
Key drivers:
• Rate gap: The Bank of England's cautious stance towards interest rate cuts is in contrast to the Central Bank of Russia's easing approach, contributing to pressure on the pound.
• Risk/commodities: Oil prices are at 90-day highs, which typically supports the ruble; the elevated prices may provide the Russian economy with enhanced stability.
• One macro factor: Rising UK unemployment and slowing wage growth are making markets anticipate further easing from the BoE, adding downward pressure on the GBP.
Range:
Expect the GBP/RUB to drift within its recent range as it consolidates below average levels.
What could change it:
• Upside risk: A surprise increase in UK inflation could shift expectations towards a tighter monetary policy from the BoE.
• Downside risk: Continued weakness in UK economic data may lead to more aggressive rate cut expectations from the Bank of England, pressuring the pound further.