The exchange rate for GBP to TWD has recently demonstrated notable stability, currently hovering around 41.10, which marks a 2.6% increase from its three-month average of 40.05. This positioning is at a 90-day high, reflecting a relatively narrow trading range of 39.35 to 41.10 over the same period.
Despite some positive economic indicators from the UK, such as better-than-expected government borrowing and a robust services PMI, the pound remains under pressure. Analysts highlight a steady decline in employment and looming tax hike expectations as significant concerns that could limit Sterling’s upward momentum. Additionally, a recent uptick in UK inflation to 3.8%, its highest level in 18 months, raises questions about the Bank of England's future interest rate decisions. A consensus among forecasters suggests a potential cut in rates by 25 basis points in November, influenced by persistent inflation and economic resilience.
On the other hand, the New Taiwan Dollar (TWD) is facing its own challenges. The central bank's recent enforcement of capital control measures aims to manage the TWD's significant appreciation, which has exceeded 10% this year. This move is particularly targeted at foreign investors to prevent funds from unproductive currency inflows, which could jeopardize Taiwan's export-dependent economy amid external pressures, including U.S. tariffs.
Fitch Ratings' recent downgrade watch on Taiwanese life insurers further complicates the TWD landscape, given their exposure to currency fluctuations from substantial U.S. dollar holdings. The Taiwanese central bank remains cautious about the economic outlook due to intensified trade tensions and is considering adjustments such as currency revaluation as a negotiating strategy with the U.S.
Overall, with the GBP to TWD exchange rate having reached these recent highs, market participants are advised to monitor economic developments closely on both sides, as they may significantly influence the trajectory of this currency pair in the coming weeks.
