Bias: Range-bound, as the SAR/GBP is slightly below the 90-day average and within the 3-month range.
Key drivers:
- Rate gap: The Saudi central bank's stable peg to the US dollar keeps the riyal strong, while the Bank of England's cautious approach to rate cuts may weigh on the pound.
- Risk/commodities: Current trends in oil prices, along with geopolitical tensions, impact the riyal's strength as oil is a key export for Saudi Arabia.
- Economic growth projections: Slower growth forecasts for the UK economy could hinder GBP performance, especially against more consistent currencies like the riyal.
Range: The SAR/GBP is expected to remain stable, showing little movement beyond its recent fluctuations.
What could change it:
- Upside risk: A stronger-than-expected rebound in UK economic data could boost the pound.
- Downside risk: Heightened geopolitical tensions affecting oil prices could lead to further pressure on the riyal.