MUFG Research discusses GBP tech, quant and macro outlook.
"Unsurprisingly technical indicators are signalling that the GBP is now heavily oversold against the USD in the near-term which increases the likelihood of a temporary relief rally. The 14-day RSI has reached its lowest level since March 2020. At the same time our short-term regression model is signalling that cable has overshot fundamental drivers to the downside," MUFG notes.
"... The fundamental outlook continues to favour further GBP weakness. A cautious message from the BoE should support a weaker GBP in the week ahead. The GBP could also face further selling pressure following local elections scheduled later this week on 5th May. If the Conservative party performs even more poorly than expected, the results will increase the likelihood that Prime Minister Boris Johnson faces a vote of no confidence. Recent reports have claimed that it could only take another eight MPs to submit letters of no confidence to trigger a vote. A pick up in political uncertainty would add to current bearish sentiment towards the GBP," MUFG adds.