MUFG Research discusses GBP outlook and highlights a scope for downside risk in the near-term.
"Short-term we see downside risks for the pound. On the political front, it would only take some gains for the Labour Party in the polls to unnerve the markets over the risk of the upcoming general election failing to resolve the Brexit gridlock by returning a parliament still unable to pass Brexit legislation – the risks associated with that don’t appear priced at present. An election result that returns a very unstable government would also undermine prospects of any considerable fiscal easing,' MUFG notes.
"A key element will be whether evidence exists of whether Brexit and other uncertainties are impacting the consumer side of the economy. Q3 GDP, jobs data and retail sales will all be released. Momentum is certainly negative and the jobs market data has the potential to disappoint," MUFG adds.