Bias: bearish-to-range-bound, with USD/EGP below its 90-day average and in the lower half of the past three months' range, leaving little room for a quick surge unless data shifts.
Key drivers:
Rate gap: The US policy path leans toward rate cuts toward a neutral stance in the coming year, while Egypt has already signaled easing, narrowing the yield gap.
Monetary policy adjustments: Egypt's December rate cut signals inflation pressure easing and a more flexible policy stance.
Macro factor: Investors expect Egypt’s macro indicators to improve in the coming year as inflation trends down and policy remains supportive.
Range: The pair is likely to drift within the three-month range, with a gentle bias toward the lower end and occasional mild tests of the lower bound if data surprises.
What could change it:
Upside risk: firmer US payrolls or hawkish Fed messaging could lift the dollar.
Downside risk: softer US data or further Egyptian policy easing could strengthen the pound.
