Bias: The GBP/THB exchange rate is currently bearish-to-range-bound, as it is just below the 90-day average and in the lower half of the 3-month range.
Key drivers:
• Rate gap: The Bank of England's cautious stance on interest rates contrasts with the Bank of Thailand's recent cut to stimulate growth, putting pressure on the GBP.
• Risk/commodities: Since oil prices have recently been above average, this could support the Thai economy and strengthen the ฿ (Baht), making the GBP less attractive.
• Economic growth projections: The UK's GDP is expected to slow, while Thailand's economy is also projected to grow below potential, creating uncertainty for both currencies.
Range: GBP/THB is expected to continue trading within its recent range, likely holding steady but facing pressure to drift lower.
What could change it:
• Upside risk: A surprise improvement in UK economic data could bolster the GBP against the THB.
• Downside risk: Further aggressive cuts by the Bank of Thailand could lead to increased Baht strength, pushing the GBP lower.