GBP/SAR Outlook:
Slightly positive, but likely to move sideways, with the rate above its recent average yet lacking a strong driver for movement.
Key drivers:
- Rate gap: The Bank of England's steady stance on interest rates contrasts with the Saudi central bank's fixed peg to the U.S. dollar, allowing for limited flexibility in the SAR.
- Risk/commodities: Oil prices have been generally stable, reinforcing the SAR's fixed value against the dollar, but this stability does not significantly boost GBP.
- One macro factor: Mixed economic indicators in the UK, including rising inflation and solid retail sales, contribute to a cautious outlook for the pound amid political uncertainty.
Range:
The GBP/SAR is likely to test mid-range levels, reflecting its upward position while remaining capped by ongoing political concerns.
What could change it:
- Upside risk: A stronger-than-expected GDP report could shift perceptions and increase demand for the GBP.
- Downside risk: Continued political instability in the UK could pressure the GBP, pulling it down towards its recent lows.
