MUFG Research discusses GBP outlook in light of the latest Brexit trade deal developments.

"Brexit trade deal Hopes increased considerably yesterday that a break-through on the contentious LPF issue has been found and that will result in a UK-EU trade deal being formally announced, possibly today or tomorrow. The difficulty of reaching a deal at this late stage is the lack of available time to scrutinise the deal (possibly part of the plan!!) and the longer Jacob Rees-Mogg delays the usual move to a “recess motion” the more likely it is that parliament will be sitting next week in order to avail parliament the opportunity to assess the deal," MUFG notes.

"Betting markets (oddschecker) today shows close to a 70% probability of a trade deal being signed before the close of the year. We view this as consistent with GBP/USD rallying further from here – scope of about 2% or so to take us to around 1.3800 versus the dollar," MUFG adds.