Pound Forecast to Fall Against Thai Baht With July Lows Being Eyed
A more stable political climate and steadily rising GDP are likely to help the Thai baht continue to rise versus the Pound.
Thailand's Baht is forecast to maintain a positive uptrend as a more stable domestic environment combines with a more generalised appreciation in Asian currencies.
Thailand's economy is estimated to have grown by a higher-than-previously expected 3.3% (yoy) in Q2 according to official figures from the University of Thailand Chamber of Commerce (UTCC) which revised up its estimates, in a release cited in the Bangkok Post on Wednesday.
The upwards revision in growth was as a result of a combination of, “A rise in consumer confidence for the first time in seven months in July, an improving manufacturing production index, positive inflation, a lower than expected drop in exports and easing drought...” according to UTCC VP of research, Thanavath Phonvichai.
Phonvichai also pointed to a renewal of political calm after years of unrest following the recent August referendum which led to a shock majority victory in favour of maintaining the existing military Junta.
Tourism and foreign investment are also likely to revive now the country is politically more stable, and not being Muslim, Thailand like Spain, may soak up some of the excess tourists who would have gone to Turkey and North Africa if it were not were fear of IS, as it provides the same warm sunshine and affordable beach holiday destination features.
Toursim figures to Thailand continue rise with each year (see chart below).
Whilst Thailand's unemployment rate is one of the lowest in the world at only 1 per cent at the end of June, analysts have often marked out for criticism sluggish inflation.
“Slowing inflation, though welcome for consumers, may signal a less than healthy economy. Disinflation is a sign that demand for goods and services is insufficient to match supply in an economy,” notes Sumitomo Mitsui Banking Corp global market analyst, Satoshi Okagawa.
“It encourages consumers to delay purchases until goods become cheaper, further lowering demand. In this deflationary spiral, wages will drop,” Okagawa added.
However, things have started to improve slightly, after recent data showed a 0.1% uptick in second quarter inflation on a year-on-year basis – the fourth month of gains in a row (see pic below).
GBP/THB Forecast: Downtrend to Continue
From a technical perspective the GBP/THB pair looks very much like most sterling pairs following the referendum, it is showing a strong move down following the vote to leave.
It is now breaking down to the lower 45 July lows.
The down-trend is expected to continue as the outlook for the UK remains decidedly dicey in the uncertain post-Brexit climate.
The MACD indicator in the lower pane has also just crossed over the signal line, providing a bearish indicator.
Some mild support is expected at 44.986, from the S1 monthly pivot but this will be less of a supporting factor in a low volume traded currency pair like GBP/THB, and we expect a clear break below that level, and then below 44.750 as supplying final confirmation on a move down to the 44.000 barrier.
