MUFG Research discusses GBP outlook and highlights the scope for GBP rally in case of avoiding a 'no deal' Brexit.
"The avoidance of a “No Deal” outcome would help the UK economy to avoid a negative shock in the year ahead...
The recent combination of stronger UK GDP and wage growth, higher inflation, and a potential break-through in Brexit talks could encourage a more hawkish policy signal at the BoE’s next policy meeting in November. We also read with some interest reports that PM May could attempt to push Brexit legislation through parliament in December. If successful, it would increase the likelihood of another BoE rate hike as early as in February of next year," MUFG argues.
"It could provide another tailwind for the pound if a “No Deal” Brexit outcome is avoided in the coming months. In these circumstances, we continue to believe that the pound could still strengthen by a further 5-10%," MUFG adds.