GBP/XOF Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear catalyst for further increases.
Key drivers:
• Rate gap: The Bank of England's cautious stance on rate cuts contrasts with the Bank of Central African States' recent decision to raise interest rates, which supports the XOF.
• Risk/commodities: Oil prices have recently been volatile, influencing the Nigerian economy, which impacts trade within the region and may indirectly affect the XOF.
• Economic growth projections: The UK's GDP growth is expected to slow, with potential impacts from US tariffs, adding uncertainty to the GBP's strength.
Range: The GBP/XOF is likely to hold its position within the recent range, maintaining stability after reaching recent highs.
What could change it:
• Upside risk: A stronger-than-expected UK jobs report could enhance GBP's appeal.
• Downside risk: Increased tensions surrounding US tariffs on UK goods could further weaken the GBP.
