SAR/GBP Outlook:
The SAR/GBP rate is currently near its 90-day average and in the middle of the recent trading range, leading to a likelihood of moving sideways. Various external influences are keeping the exchange rate stable.
Key drivers:
- Rate gap: The Saudi Central Bank maintains a stable peg for the riyal to the US dollar, while the Bank of England is signaling a more dovish approach to interest rates, creating pressure on the pound.
- Risk/commodities: The ongoing oil market trends can affect the Saudi economy and currency value, but prices are currently stable, leading to less volatility for the riyal.
- One macro factor: Rising UK political uncertainty, especially with leadership concerns surrounding Keir Starmer, is contributing to GBP's weakness.
Range:
The SAR/GBP exchange is expected to hold within the recent 3-month range, showing limited fluctuations.
What could change it:
- Upside risk: A stronger than anticipated UK economic report could boost the pound.
- Downside risk: Continued political instability in the UK may further depress GBP value.