USD/EGP Outlook:
The USD/EGP outlook is likely to increase as the exchange rate is currently above its recent average and near recent highs. Key drivers are supporting this momentum, although market uncertainty could introduce volatility.
Key drivers:
• Rate gap: The U.S. Federal Reserve's interest rate hikes have attracted capital, strengthening the USD against the EGP.
• Risk/commodities: Current oil price trends are stable, helping to maintain the USD's strength while enabling Egyptian exports to be more competitive.
• One macro factor: Standard Chartered projects a stabilization of the EGP driven by anticipated economic growth, which may support its value against the dollar.
Range:
The USD/EGP is likely to drift within its stable 3-month range, testing the recent highs.
What could change it:
• Upside risk: A signal from the U.S. government indicating potential tariff escalations could pressure the USD lower.
• Downside risk: An unexpected dip in remittances or slower economic growth in Egypt could lead to weaker EGP performance.
