GBP/XCD Outlook:
Slightly positive, but likely to move sideways due to the rate being above its recent average and lacking a clear driver.
Key drivers:
• Rate gap: The Bank of England's recent dovish stance suggests less upward pressure on the GBP compared to the stable East Caribbean Central Bank policies governing the XCD.
• Risk/commodities: Recent oil prices have shown volatility, but they remain above average levels, supporting currencies linked to oil-exporting nations.
• One macro factor: The UK's mixed economic indicators, such as rising retail sales but high inflation, create uncertainty for the GBP going forward.
Range:
GBP/XCD is expected to drift within its recent range, staying above the 90-day average but facing limited movements.
What could change it:
• Upside risk: A strong rebound in UK economic data could boost GBP appeal.
• Downside risk: Further political instability in the UK could lead to increased selling pressure on the GBP.