MUFG Research discusses GBP outlook and flags a scope for further downside in the very near-term.
"Our short-term GBP/USD model below highlights the divergence with spot that illustrates the increased negative Brexit risk premium. But the flow of economic data is also now pointing to the potential of recession in the UK. The jobs data yesterday was impressive with the weekly average earnings, ex-bonus 3mth annual rate jumping to 3.6%, the highest since July 2008. However, the less closely watched jobless claims print is indicating a softening labour market," MUFG notes.
"The pound is at new lows but we see still strong fundamental reasons for the negative momentum to continue, at least into the formal announcement of the new PM next Tuesday and possibly through to the BoE meeting on 1st August, the day after the FOMC meeting," MUFG adds.