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Oct 09 - 02:55 PM

GBP: More Cautious Over GBP Upside Potential Even As EU & UK Appear Moving Closer To A Deal - MUFG

By eFXdata  —  Oct 09 - 01:30 PM

MUFG Research adopts a cautious bias on GBP in the near-term.

"The improving mood music for Brexit trade talks is helping to lift GBP but upward momentum has been dampened by the negative offset from rising downside risks to the economic recovery in the UK from further COVID-related disruption. The sharp increase in new COVID cases in recent weeks have increased pressure on the government to further re-tighten restrictions on activity," MUFG notes. 

"In these circumstances,  we are becoming more cautious over upside potential for the GBP  even as the EU and UK appear to be moving closer to a trade deal. The upcoming EU Leaders Summit is not expected to be game changer for the GBP, but should not be overlooked as positive or negative surprises could trigger larger than expected moves. Further COVID-related disruption is increasing the likelihood of more BoE stimulus before year end which will weigh on the GBP," MUFG adds. 

Source:
MUFG Research/Market Commentary

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