MUFG discusses GBP outlook and targets GBP/USD at 1.3300, and EUR/GBP at 0.8400 by year-end.

"We have not changed our view for the pound to strengthen modestly versus the dollar and weaken modestly versus the euro," MUFG notes.

"The macro backdrop showing resilience has helped provide support for the pound but higher rates and energy prices could see that resilience questioned. The BoE is unlikely to meet current market pricing resulting in pound underperformance, albeit more versus non-dollar currencies," MUFG adds.