Bias: GBP/XCD is bullish-to-range-bound, as the pair sits above its 90-day average and in the upper half of the last three months’ range.
Key drivers:
• Rate gap: The BoE is expected to ease gradually, with two small rate cuts in 2026, while the ECCB maintains a stability-focused stance, keeping the UK rates comparatively higher for longer than the region.
• Risk/commodities: Global risk appetite remains cautious; Caribbean tourism trends and the region’s exposure to the US dollar help keep XCD on a stable footing, while a softer US economy or oil-market shifts could tilt flows.
• Macro factor: UK inflation trends easing toward the BoE target through late 2026 support the gradual path.
Range: The pair will drift within the 3-month range and may test the upper end.
What could change it:
• Upside risk: stronger UK data or a hawkish BoE stance that delays easing could push GBP higher.
• Downside risk: a clearer UK data miss or a risk-off environment that strengthens XCD could push the pair lower.