Bias: GBP/XOF remains bullish-to-range-bound as it sits above its 90-day average and in the upper half of the 3-month range.
Key drivers:
- Rate gap: The BoE signals a cautious path with cuts likely only later in 2026, while BEAC has raised rates to defend the CFA franc, widening policy stance differences between the two.
- One macro factor: UK inflation is expected to ease toward the BoE’s 2% target by late 2026, helped by softer energy costs.
- Risk appetite: A firmer global risk tone can lift the pound versus risk-sensitive peers, supporting GBP against XOF.
Range: GBP/XOF is likely to hold in the 3-month band, with a drift toward the upper end if risk appetite remains firm and no fresh shocks emerge for now.
What could change it:
- Upside risk: stronger UK data that delays rate cuts or shifts BoE guidance could push GBP higher.
- Downside risk: renewed risk-off flows or softer UK data could push GBP/XOF toward the lower end.
