Barclays Research discusses GBP outlook and targets GBP/USD around 1.27, and EUR/GBP around 0.91 through year-end.
"We expect a broadly range-bound GBP in the near term with a gentle depreciation drift vs. EUR due to Brexit uncertainties. The lack of a trade deal is likely to disproportionately aﬀect the British economy following the pandemic, constraining GBP gains from the global recovery," Barclays notes.
"While this should also negatively impact Europe, the EUR is likely to be supported near term by a reduction of EA cohesion risk as the Virus Recovery Plan marks an important first step towards European fiscal integration. However, the UK’s many attractive attributes as a place for long-term investments should cap the pound’s downside and help it ascend from its current undervaluation," Barclays adds.