MUFG Research discusses GBP outlook and shifts to a buy-on-dips bias in the near-term.
"The risks around Brexit changed notably last Thursday and a further apparent shift by the UK on Monday night (Customs border down the Irish Sea?) has shifted us further towards a deal that could feasibly be done by tonight, ready to be presented at the EU summit tomorrow. With this now a much more likely outcome, the focus is now very much on whether parliamentary support is there to get this approved on Saturday," MUFG notes.
"The EU may still ask for an indicative vote in parliament. If passed, that would open up a potential amendment to the Benn Act to allow for a shorter delay. A delay after a deal in principle is reached is unlikely to hit the pound, but the longer any delay is, the greater the risks for Johnson.
Still, buying the pound on any dips looks the sensible trade now with a deal supported by parliament the likeliest outcome, whether coupled with some degree of delay or not," MUFG adds.