HKD/GBP Outlook:
Bearish, as the rate is below its recent average and trading near its lows due to current pressures.
Key drivers:
- Rate gap: The Hong Kong Monetary Authority's consistent interventions to support the HKD are creating a widening interest rate differential with the Bank of England, which is maintaining a dovish stance.
- Market volatility: Ongoing global economic factors, including concerns from US tariff announcements, are creating uncertainty for the HKD's stability and thus affecting the HKD/GBP exchange rate.
- Economic outlook: UK economic indicators, including a potential slowdown indicated by mixed GDP growth expectations, create additional pressures on the GBP.
Range:
The HKD/GBP is likely to drift within its recent range, with pressures suggesting it may test the lower end of this band.
What could change it:
- Upside risk: A strong rebound in UK economic data could bolster the GBP, providing upward momentum for the exchange rate.
- Downside risk: New interventions by the HKMA or further deterioration in global market conditions could push the HKD lower against the GBP.