GBP/USD up 89 pips to 1.3813 today
MUFG Research discusses GBP outlook and maintains a bearish bias into year-end.
“The UK rate market moved to price in more front loaded rate hikes from the BoE following the hawkish comments from Governor Bailey over the weekend,” MUFG notes.
“However, we are still sticking to our view that the GBP is more likely to weaken heading into year end
given the more challenging backdrop of slowing global growth, higher
inflation and tightening liquidity conditions which should be less
supportive for risk assets and high beta currencies like the pound. More front-loaded BoE tightening could also be viewed as more of a policy mistake if the UK economy slows more notably heading into year end triggering a weaker pound,” MUFG adds