GBP/HKD Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average, but lacks a clear driver.
Key drivers:
• Rate gap: The Bank of England's dovish stance contrasts with the Hong Kong Monetary Authority's interventions to support the HKD's peg to the US dollar.
• Risk/commodities: Oil prices are stable, providing mixed impacts on the GBP and HKD.
• One macro factor: The UK's retail sales increased recently, indicating moderate economic strength but coupled with political uncertainty.
Range:
Expect the GBP/HKD to hold within its recent range as it trades at higher levels but shows limited momentum.
What could change it:
• Upside risk: A stronger-than-expected GDP report could boost the pound.
• Downside risk: Ongoing political uncertainty in the UK may weigh down on GBP.