The exchange rate forecast for the Hong Kong Dollar (HKD) to British Pound (GBP) reflects a complex interplay of factors influencing both currencies in recent weeks. Analysts note that the GBP has faced pressure due to rising budget concerns in the UK, particularly in the lead-up to Chancellor Rachel Reeves's upcoming autumn budget. The potential abolition of the two-child benefit cap has raised doubts about the government's ability to fund its commitments, contributing to an increased risk premium on Sterling.
Market participants are keenly awaiting the speech from Bank of England Governor Andrew Bailey, as a hawkish stance could provide support for GBP in the near term. At the same time, recent economic data has highlighted stagnation in the UK economy with a widening current account deficit, though investor focus has shifted more toward developments in the U.S., particularly a government shutdown that could impact the Federal Reserve's decisions.
Conversely, developments surrounding the HKD indicate a stable but cautious outlook. The Hong Kong Monetary Authority (HKMA) recently cut its base interest rate by 25 basis points to align with the U.S. Federal Reserve, marking its first reduction since late 2024. This move comes amid prior market interventions to maintain the HKD's peg to the U.S. dollar, which are seen as necessary amidst ongoing geopolitical tensions. The HKD has traded closely around 0.0953 to GBP, reflecting a stable range with minimal volatility—an indication of market confidence in maintaining the currency's established peg.
In the short term, with the HKD to GBP exchange rate hovering near 7-day lows around 0.095342, just above its 3-month average, experts suggest that the outlook will largely depend on forthcoming economic data releases and central bank communications from both the UK and Hong Kong. Investors are advised to remain vigilant as the interplay of these factors could affect transaction costs for businesses and individuals engaged in international trade.
