MUFG Research maintains a constructive bias on GBP into year-end.
"We remain bullish over the forecast horizon on the pound but given the USD upgrades to forecasts, more of our bullish view is now reflected versus EUR compared to a month ago," MUFG notes.
"We are also more mindful of COVID risks than a month ago with 26,068 cases reported on 30th June – the highest total since January. The Delta variant is driving the spread...If disruption is limited, we believe the BoE will be in a much more confident position to signal to the markets a more dramatic shift in guidance. A rate increase is about 75% priced by the end of 2022 and if the Job Retention Scheme ends relatively smoothly, rates will have moved further higher and the BoE would then be in a position by November to at least endorse the higher market rates," MUFG adds.