Bias: The bias for HKD/GBP is range-bound, as it is near the 90-day average and within the middle of the 3-month range.
Key drivers:
• Rate gap: The Hong Kong Monetary Authority's efforts to support the HKD have resulted in a significant interest rate differential between the HKD and GBP, impacting currency flows.
• Risk/commodities: With oil prices currently stable, the influence on risk-sensitive currencies like the HKD is moderate, supporting a steady exchange environment.
• Economic growth projections: The UK's projected GDP slowdown, coupled with a cautious BoE monetary policy, is contributing to uncertainty around the GBP.
Range: HKD/GBP may hold steady, occasionally drifting as market conditions evolve, likely remaining within the current trading range.
What could change it:
• Upside risk: A stronger-than-expected recovery in global risk appetite could boost the HKD against the GBP.
• Downside risk: Weaker UK economic data or broader geopolitical tensions could exert downward pressure on the GBP, affecting the exchange rate negatively.