GBP/PKR Outlook:
The outlook for GBP/PKR is likely to increase as the rate is above its recent average and near recent highs, supported by ongoing geopolitical tensions affecting the PKR.
Key drivers:
- Rate gap: The Bank of England's recent decision to maintain rates at 3.75% signals a more cautious monetary policy compared to Pakistan’s challenges, which are influenced by geopolitical tensions and inflation.
- Risk/commodities: With oil prices remaining volatile, the PKR is under pressure as imports become more expensive, impacting its value against the pound.
- One macro factor: The uncertainty surrounding regional stability, including trade disruptions, continues to negatively impact the PKR's performance.
Range:
GBP/PKR is likely to hold in its current stable range, reflecting recent trading activity.
What could change it:
- Upside risk: A surprising improvement in UK GDP growth could bolster the pound further.
- Downside risk: Continued geopolitical tensions leading to further depreciation of the PKR could weaken the exchange rate.