GBP/XCD Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The Bank of England's hold on interest rates reveals a cautious approach compared to the East Caribbean Central Bank's stable policy.
• Risk/commodities: Oil prices have been volatile but remain above average, potentially affecting the GBP due to its impact on the global economy.
• One macro factor: Recent UK retail sales growth is encouraging, but mixed economic signals, like inflation and unemployment, create uncertainty.
Range:
The GBP/XCD is expected to hold within its recent range as it operates slightly above average but has limited momentum to break out significantly.
What could change it:
• Upside risk: A more positive tone from the Bank of England could support the pound.
• Downside risk: Further political instability in the UK may lead to increased pressure on the currency.
