MYR/GBP Outlook:
The MYR is likely to increase as it currently trades above its recent average and near recent highs. This strength is supported by Malaysia's robust economic growth and a stable monetary policy.
Key drivers:
• Rate gap: Bank Negara Malaysia's decision to maintain its interest rate contrasts with expectations of a rate cut from the Bank of England, benefitting the MYR.
• Risk/commodities: Oil prices are at recent highs, which generally supports emerging currencies like the MYR, benefiting from increased revenue in commodity sectors.
• One macro factor: The expansion in Malaysia's construction sector by over 10% year-on-year has bolstered the MYR, showcasing economic resilience.
Range:
Expect the MYR/GBP to hold within its recent 3-month range, as the current strength provides a solid foundation.
What could change it:
• Upside risk: Further positive economic data from Malaysia could strengthen the MYR further.
• Downside risk: A significant agreed rate cut by the Bank of England could increase selling pressure on the GBP.