SAR/GBP Outlook: Bearish, as the rate is below its recent average and near recent lows, influenced by current economic conditions in the UK.
Key drivers:
• Rate gap: The Saudi Central Bank maintains a stable peg to the US dollar, while the Bank of England’s potential rate cuts could widen the gap with the SAR.
• Risk/commodities: Oil prices have remained volatile but are generally below recent averages, potentially impacting the Saudi economy and the Riyal.
• One macro factor: Recent warnings about US tariffs threaten the UK’s GDP, which may dampen GBP further.
Range: The SAR/GBP exchange rate is likely to hold within its recent range, with limited upward momentum given current pressures.
What could change it:
• Upside risk: A significant rebound in oil prices could strengthen the SAR against the GBP.
• Downside risk: Further deterioration in UK economic data could lead to increased selling pressure on the GBP.