Credit Agricole CIB Research discusses GBP outlook and maintains a bearish bias and a strategic short GBP/USD exposure in spot targeting a move towards 1.10.

"The GBP has been trading in sync with the broad moves in global risk sentiment and the USD. FX investors have adopted a more defensive stance more recently, ahead of the all-important US CPI data and December Fed policy meeting next week. This has weighed on GBP/USD, and we expect the underperformance to continue especially given that there are some downside risks for the GBP as well looming large in the near term," CACIB notes. 

"This, together with the fact that the GBP has largely recouped its post-mini-budget losses, makes us think that the MPC will disappoint the still relatively hawkish market rate hike expectations on 14 December. Indeed, we expect that the terminal bank rate could come below the current market expectation of c.4.6% (as priced in by the UK OIS curve at the time of writing). We maintain a bearish outlook on the GBP vs the USD and the EUR from current levels and remain short GBP/USD," CACIB adds.