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GBP/HKD | Price Forecast and Trading Outlook

Sam Boughedda trader
Updated 31 Jan 2025

The GBP/HKD currency pair reflects the exchange rate between the British pound sterling and the Hong Kong dollar. One defining feature of the Hong Kong dollar is its currency board system, which pegs it to the US dollar at a fixed rate between 7.75 and 7.85 HKD per USD. On its website, the Hong Kong Monetary Authority states:

“The LERS [Linked Exchange Rate System] is the cornerstone of Hong Kong’s monetary and financial stability. It has weathered many economic cycles and has proved highly resilient in the face of regional and global financial crises over the years.”

This peg means that movements in GBP/HKD are not only shaped by UK economic performance and global market sentiment but are also indirectly tied to US monetary policy. Changes in US interest rates, for example, can ripple through to affect the Hong Kong dollar, making GBP/HKD a reflection of both transatlantic and regional trends.

GBP/HKD Performance & Price Chart

While the GBP/HKD moved higher between early August and late September 2024, the rise was somewhat short-lived as the HKD strengthened significantly from the end of September to now. As a result, the HKD has strengthened against the dollar this year, with the pair down approximately 1.7% through 2024.

TimeframePerformance
3 Months-6.42%
6 Months-1.20%
Year-to-Date-1.73%
1 Year-1.79%

Other Currency Pairs

GBP/HKD Forecast

Nomura analysts said in their recent outlook for the British pound that they expect it “to continue to gain ground gradually against other currencies where their respective central banks are more concerned about the downside risks to growth rather than sticky price pressures.”

Meanwhile, looking ahead to 2025, Forex.com senior market analyst Fiona Cincotta said the UK economy is expected to continue to grow. However, the analyst noted that “GDP could be weaker than the 1.5% forecast by the BoE owing to several key factors, including uncertainty surrounding trade and a less expansionary UK budget,” which would, in turn, have a negative impact on the GBP. 

For the Hong Kong dollar, investors may be bullish due to the Hong Kong currency board system ensuring a tightly regulated exchange rate against the USD, providing confidence in the stability of the HKD. The Hong Kong Monetary Authority (HKMA) maintains sufficient reserves to defend the USD peg, reinforcing its credibility. Furthermore, Hong Kong’s position as a global financial centre attracts significant capital inflows, supporting the HKD. However, while proximity to China is an asset, it can also impact the HKD. Slower Chinese economic growth, rising geopolitical tensions, or policy shifts affecting Hong Kong’s autonomy can negatively impact the HKD.

Trading Economics global macro models projections and analysts expectations forecast the GBP/HKD to be priced at 9.7512 in one year.

Our View: While the pound has shown strength in 2024 against many other currencies, against the HKD, it has been a different story. Even so, there are still headwinds impacting both economies meaning traders/investors should be thorough in their research before entering position(s) in the pair. 

Trading the GBP/HKD

Those trading the currency pair should consider:

Monitor US Dollar Trends: As the HKD is pegged to the USD, movements in the US dollar heavily influence GBP/HKD. Traders should factor in the potential impact of USD strength or weakness.

Spreads: Given the pair is less frequently traded than many others, the spread on brokerage platforms may be slightly wider. Risk management and position sizing are, therefore, crucial when trading this pair.

Geopolitical Developments in Hong Kong: Long-term HDK traders should also consider the geopolitical developments in Hong Kong, as they can significantly impact the currency by influencing investor confidence, capital flows, and financial market stability. Events such as political unrest or changes in Hong Kong’s relationship with mainland China may weaken the currency by eroding trust in its economic and regulatory environment. 

UK Budget Impact: The UK budget and its impact on the economy could impact the GBP in 2025 and is something to keep an eye on for long-term GBP traders. 

Assess the Macro Factors: Both bullish and bearish traders should evaluate how each economy’s fundamentals and policy decisions may impact their positions in the short, medium, and long term.

Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples. 
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