EUR/PKR Outlook:
Slightly positive, but likely to move sideways as the euro trades above its recent average and lacks a clear driver.
Key drivers:
- Rate gap: The European Central Bank is maintaining interest rates, while the State Bank of Pakistan faces challenges due to geopolitical tensions affecting the PKR.
- Risk/commodities: Oil prices are currently elevated, which benefits the euro given the Eurozone's reliance on energy imports.
- One macro factor: The IMF’s agreement with Pakistan has sparked some market confidence, but ongoing inflation remains a concern.
Range:
The EUR/PKR is likely to hold in a stable range as it oscillates within its recent 3-month levels.
What could change it:
- Upside risk: A significant resolution to geopolitical tensions in the region could support the PKR.
- Downside risk: If inflation concerns persist in Pakistan, further depreciation of the PKR may negatively affect the EUR/PKR outlook.