The current market bias for the GBP to SGD exchange rate is bearish. Key drivers include:
- The Bank of England's expected interest rate cuts, projected to reach 3.25% by mid-2026, indicating a shift in monetary policy.
- Singapore’s solid economic growth forecast at 2.3% for 2026, complemented by a stable monetary policy from the Monetary Authority of Singapore (MAS).
- Although UK inflation is predicted to decline significantly, it may take time to stabilize, creating pressure on the GBP.
Near-term, GBP to SGD is expected to trade within a fairly narrow range, reflecting limited volatility.
An upside risk could emerge if UK retail sales data show stronger-than-anticipated growth, boosting the pound. On the downside, if inflation pressures persist, it could lead to quicker rate cuts from the BoE, further weakening the GBP relative to the SGD.