In a move reflecting growing international confidence in the trajectory of the Egyptian economy, Standard Chartered Bank made a notable positive adjustment to its forecasts for the future exchange rate of the US dollar against the Egyptian pound, as well as for inflation and economic growth indicators, in its annual report entitled “Global Trends 2026”.
Dollar to pound exchange rate forecast
The prestigious British bank predicted a significant improvement in the Egyptian pound against the US dollar, forecasting that the dollar would reach approximately 47.5 pounds during the first quarter of 2026. This represents a clear improvement compared to its previous estimates of around 49 pounds. The bank also revised its forecast for the end of 2026, now predicting a stable exchange rate of 49 pounds instead of its earlier projection of 51 pounds.
Economic context and reasons for improvement
This optimism from international financial institutions stems from several key factors that have emerged in the Egyptian economic landscape over the past two years. Egypt has undergone an intensive cycle of monetary and fiscal policy adjustments, including the liberalization of the exchange rate and the elimination of the parallel market, which has contributed to restoring the confidence of foreign investors.
The report explained that this positive adjustment is primarily due to the gradual improvement in foreign exchange market dynamics, supported by strong foreign currency inflows. Direct investments, particularly the continued flows from partners in the GCC (such as the Ras Al Hikma deal and related transactions), play a crucial role in bolstering foreign reserves and rebuilding the banking sector's net foreign assets.
Inflation indicators and monetary policy
On the price front, the report brought good news regarding inflation rates, which have burdened both citizens and businesses. Standard Chartered expects the wave of price increases to subside and the inflation rate to fall to around 11% by June 2026. This anticipated decline is attributed to lower global commodity prices and improvements in domestic supply chains.
This expected decrease in inflation will give the Central Bank of Egypt ample room and greater flexibility to begin a cycle of monetary easing and interest rate cuts, which in turn will alleviate the financing burdens on companies and the private sector, and stimulate local investment.
Economic growth prospects
Regarding growth, the report paints an optimistic picture of real GDP, projecting it to rise to 4.5% in fiscal year 2026. These projections are based on strong anticipated activity in vital sectors including trade, manufacturing, and the hydrocarbons (oil and gas) sector.
The bank also noted the importance of continued tourism flows and stable Suez Canal revenues as supporting factors, stressing that the government's offerings program (privatization) contributes to creating a more organized and attractive economic environment for long-term capital.
