MUFG Research maintains a bearish bias on GBP in the near-term.
"The pound remains under downward pressure although it has found some support at least temporarily in the near-term with cable holding above its 200-day moving average at 1.2735 and EUR/GBP failing to break above the 0.9300-level. The UK government continued to head down a more confrontational path with the EU yesterday when the Internal Market bill secured as expected a second reading," MUFG notes.
"On balance, we continue to believe that risks remain skewed to the downside for the pound in the near-term. There appears to be no easy quick way out to resolve the latest gridlock in UK-EU trade negotiations. A deal is only probable very late in the day now and hence any short-term pound bounce will not last with potential big declines still to come," MUFG adds.