Citi Research discusses GBP outlook in light of the latest Brexit developments.'
"Latest Brexit developments – PM Theresa May overnight signals a fourth (and final) Meaningful Vote on her Withdrawal Bill for the week of June 3.
Sterling takes a hit as this latest development, absent a ‘definitive vote’ majority for a customs arrangement and confirmatory referendum, sees limited scope for a Brexit breakthrough and which either (1) raises the risk of a Tory leadership change over summer (with PM May possibly replaced by a hard-Brexiteer) who will likely push a “No Deal” WTO exit agenda, OR (2) the UK risks heading into a general election that raises the chances of an opposition Jeremy Corbyn – led Labor Party win," Citi notes.
"Bottom Line - Neither of the 2 options appears to be palatable for sterling but there is also a chance that PM May could just pull off a deal in the week of June 3.
For now, we still retain a bullish sterling call given the limited impact of global trade tensions on the UK," Citi adds.