HomeNewsGBP/THB: British Pound Rallies to a Three-Month High
GBP/THB: British Pound Rallies to a Three-Month High

GBP/THB: British Pound Rallies to a Three-Month High

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The GBP/THB pair touched it’s highest level since April on Wednesday, as the British Pound continues to dominate the struggling Thai Baht.

At time of writing, one British Pound buys 44.65 Baht, up almost 6% from the last month’s 41.84 low. The gains come as traders punish the Bank of Thailand (BOT) for not tightening monetary policy.

The BOT is one of the few Asian central banks yet to raise rates in the face of rampant inflation. Surprisingly, at the banks last meeting in June, it’s members voted to keep interest-rates at 0.50%.

The lack of action is puzzling considering the country is battling red-hot inflation and a cost-of-living crisis. Data released in June showed Thailand’s consumer prices rose to a 14-year high annual rate of 7.66%.

One reason the BOT may be reluctant to hike rates is to stimulate economic growth. Thailand’s economy was hit hard during the covid pandemic which left its tourist hotspots deserted for almost two years.

A weaker Thai Baht makes the country more attractive to foreign travelers. As such, the BOT may hold off on strengthening the baht until peak holiday season is over.

That being said, the pick-up in inflation should increase pressure on the BOT to hike rates at the next meeting in August. Calls for an 50-basis-point move have largely been ignored with many analysts predicting a 25-bp hike is on the cards. Whether this would be enough to put a bid under the baht remains to be seen. For now at least, the path of least resistance for GBP/THB is higher.

GBP/THB Outlook

The daily price chart shows the British Pound is breaking higher against the Thai Baht. The pair has comfortably cleared the 200-Day Moving Average(DMA) at 43.95 and looks likely to test the long-term downtrend at 44.85.

However, the Relative Strength Index (RSI) of 69.28 is approaching overbought territory. Typically, a reading >70 indicates a rally may be close to exhaustion. Nonetheless, I expect the Pound will soon test the trend line resistance.

The outlook remains positive as long as the pair stays above the 200-DMA. On that basis, a daily close below 0.4395 negates the immediate bullish outlook.

Pound to Thai Baht Price Chart

Elliot Laybourne
Elliott is a former investment banker with a 20 year career in the city of London. During this time he held senior roles at ABN Amro, Societe Generale, Marex Financial and Natixis bank, specialising in commodity derivatives and options market-making. During this time, Elliott’s client list included Goldman Sachs, JP Morgan, Credit Suisse, Schroders Asset Management, and the Pennsylvania State Public School Employees Retirement System, amongst others. Today, he splits his time between Thailand and Dubai, from where he provides trading consultancy and business development services for family office and brokerage clientele.