The GBP to XOF exchange rate is currently bearish.
Key drivers include the interest rate differential, with the Bank of England expected to lower rates amid slowing growth and inflation. Meanwhile, the XOF faces uncertainty due to the potential introduction of a new currency by the Alliance of Sahel States, which may reduce the stability of the XOF. Additionally, Nigeria's recent approval of the CFA franc for repatriating export proceeds could indirectly support the XOF.
In the near term, the exchange rate is expected to trade within a range similar to its past few months, remaining stable around recent levels.
An upside risk could stem from unexpected positive economic data in the UK, potentially strengthening the GBP. Conversely, a downside risk may arise if plans for the new currency by the AES progress, undermining demand for the XOF and affecting the exchange rate negatively.