GBP/XOF Outlook:
Slightly positive, but likely to move sideways; the rate is just above its recent average and lacks a clear driver.
Key drivers:
- Rate gap: The Bank of England's recent decision to hold interest rates steady contrasts with the stable economic indicators for the West African CFA Franc, maintaining a cautious approach.
- Risk/commodities: Oil prices are holding above average, which benefits currencies of oil-exporting nations, but has limited direct impact on the GBP and XOF.
- Macro factor: The ongoing transition from the CFA franc to the Eco currency, initiated by France's ratification of new legislation, creates uncertainty that could affect XOF stability.
Range:
GBP/XOF is expected to hold within its narrow recent range, drifting slightly but not testing extremes.
What could change it:
- Upside risk: A more hawkish tone from the Bank of England in upcoming communications could support GBP gains.
- Downside risk: Any signs of instability related to transitioning to the Eco currency could weaken the XOF.
