GBP/XCD Outlook: Likely to increase, supported by the pound trading above its recent average and near its recent high.
Key drivers:
- Rate gap: The Bank of England appears poised to maintain higher interest rates, contrasting with the East Caribbean Central Bank's stable approach, which supports the pound.
- Risk/commodities: Oil prices remain volatile, affecting global economic conditions, which can influence the East Caribbean economy indirectly.
- One macro factor: Recent UK economic data, including strong retail sales and PMI figures, suggest resilience, which has boosted expectations for the pound.
Range: GBP to XCD is expected to hold in its recent range with potential upward movement as economic conditions evolve.
What could change it:
- Upside risk: A stronger-than-expected UK economic performance could lead to increased demand for the pound.
- Downside risk: Any signs of political instability in the UK ahead of local elections may negatively impact the pound's strength.