USD/EGP Outlook:
Bearish, as the rate is below its recent average and near recent lows, reflecting broader trends in both economies.
Key drivers:
• Rate gap: The Federal Reserve has held interest rates steady while the Central Bank of Egypt adopts a flexible monetary policy, contributing to the pound's appreciation.
• Risk/commodities: Increased foreign currency inflows in Egypt, driven by strong tourism and remittances, are positively impacting the EGP compared to the USD.
• One macro factor: Standard Chartered forecasts Egypt's economy to grow robustly in 2026, bolstering confidence in the pound.
Range:
The USD/EGP is likely to drift within a narrow range as it remains below its recent average.
What could change it:
• Upside risk: Any unexpected strengthening in the US labor market could support the USD.
• Downside risk: Increased geopolitical tensions and continued foreign outflows could further weaken the USD.
