Credit Agricole CIB Research discusses GBP outlook and maintains a bearish bias in the near-term.

"The GBP has already lost ground after the latest political developments and could remain a pressure valve for anxious investors fretting about the impact of the unfolding political drama on the UK stock and gilt markets. We note, however, that the GBP remains quite oversold and that hawkish BoE rate expectations continue to boost its rate appeal," CACIB notes.

"Status-quo is preserved with PM Keir Starmer remaining in charge but with additional fiscal austerity measures potentially required due to growing borrowing costs and the weakness of the real economy. We see GBP/USD remaining on a downward trajectory towards 1.30 this year before a recovery towards 1.39 in 2027. We also expect EUR/GBP to remain range-bound around 0.86 in 2026 but ultimately head lower towards 0.84 into 2027," CACIB adds.