Bias: The SGD/GBP pair is range-bound, as it is near the 90-day average and within the middle of the 3-month range.
Key drivers:
- Rate gap: The Monetary Authority of Singapore has adopted a more accommodative policy, while the Bank of England has hinted at cautious rate cuts, creating differing inflation expectations for the two currencies.
- Risk/commodities: With oil prices stabilizing, the Singapore Dollar could remain resilient, benefiting from its links to trade and commodities.
- Economic growth outlook: Singapore shows economic resilience despite global challenges, while the UK faces slower growth and potential GDP stagnation.
Range: The exchange rate is likely to hold within its recent stable range, with fluctuations expected but no major breaks to the extremes for now.
What could change it:
- Upside risk: A stronger-than-expected economic performance in Singapore could drive the SGD higher.
- Downside risk: Renewed geopolitical tensions might weigh on the GBP, leading to increased selling pressure.