GBP/SGD Outlook:
Slightly weaker, but likely to move sideways as the rate is near its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The Bank of England's cautious approach contrasts with Singapore's robust economic performance, affecting GBP’s relative strength.
• Risk/commodities: The impact of ongoing political uncertainty in the UK could lead to a decline in GBP's appeal, while stable economic indicators help maintain interest in SGD.
• One macro factor: Singapore's economy showed strong growth in Q4 2024, which is bolstering confidence in the SGD amidst global uncertainties.
Range:
The GBP/SGD is likely to hold within its recent range, influenced by current political and economic conditions.
What could change it:
• Upside risk: A surprising boost in UK economic data could restore confidence in the GBP.
• Downside risk: Continued political instability in the UK may further weaken the pound in the near term.