GBP/VND Outlook: The outlook is slightly positive, but likely to move sideways as the rate is above its recent average and near 14-day highs without strong underlying drivers.
Key drivers:
- Rate gap: The Bank of England is maintaining a cautious approach to rate cuts, while the Vietnamese central bank is advised to hold off on expanding monetary policy, creating a divergence in expectations.
- Risk/commodities: With the US Federal Reserve cutting rates, the USD/VND exchange rate may stabilize, supporting the VND against other currencies, including the GBP.
- One macro factor: The IMF’s approval of a currency adjustment for the VND is expected to influence Vietnam's economic landscape and trade significantly.
Range: GBP/VND is likely to drift within the recent 3-month range, reflecting stability rather than sharp movements.
What could change it:
- Upside risk: Stronger-than-expected economic data from the UK could boost the GBP.
- Downside risk: Continued global trade tensions and additional US tariffs could weigh on the GBP, leading to further declines.