Bank of America Global Research discusses GBP outlook and maintains a sell-on-rallies bias but sees the recent cycle lows already in place.

"Connecting the dots from our analysis, we see little prospect for a sustained recovery in GBP through 2023, which may turn out to be a holding pattern year. Whilst we see scope for a weaker GBP, consistent with year-end forecasts, we think that the lows for the cycle are in place, barring another large spike in idiosyncratic risk," BofA notes. 

"Whilst politics and the relationship with Europe remain in the background, we note that there has been more interactive debate on the pros and cons of Brexit. This matters ahead of a general election in 2024, as it could shape the relationship over the coming years. Polling from What the EU Thinks? has shown that a larger proportion of voters believe that the decision to leave the EU was wrong. Direction of travel matters, and among potential scenarios, there could be a constellation of views in the next government that would seek to enhance rather than weaken the relationship with the EU. In this scenario, we would expect a significant recalibration in GBP," BofA adds.