Bias: bullish-to-range-bound, because GBP sits above its 90-day average and is in the upper half of the three-month range.
Key drivers:
- Rate gap: BoE remains cautious on rate cuts while BEAC tightened policy, creating policy divergence that supports GBP against XOF.
- Macro factor: BoE has signaled further reductions are likely in 2026, keeping the policy stance restrictive enough to underpin the pound only if growth holds up, creating a cautious but constructive backdrop.
Range: the pair is likely to drift within the three-month range, with a mild tilt toward the upper end if broader market risk appetite holds and no fresh UK data surprises.
What could change it:
- Upside risk: stronger-than-expected UK data or a delay to the anticipated BoE rate cuts could push GBP toward the upper end, drawing in buyers on hopes of relative UK resilience.
- Downside risk: further BEAC tightening or softer UK data could lift XOF and push the pair lower, especially if risk-off trading surfaces.
