MUFG Research discusses GBP outlook in light of the latest Brexit developments.
"There was plenty of excitement yesterday afternoon ahead of PM May’s statement but the prospect of breathing new life into her Brexit deal remains negligible. We therefore concur with the fresh slide in the pound from the highs reached just prior to the statement as there now appears a growing risk that a fall away in Conservative support on a fresh vote would not be compensated by increased Labour Party support, thus meaning MV4 will be defeated by a greater margin that he MV3 margin of defeat of 58 on 29th March," MUFG notes.
"In fact what could be viewed as best from a sentiment perspective and for the pound, would be for PM May to resign now and not waste the next two weeks on a deal that stands next to no chance of passing. After being the best G10 performing currency in Q1, the pound has reversed all of the Q1 gain and some more so far in May.
But if May continues to pursue this deal and with ample scope for the market to re-price no-deal risks later this year and general election risks, we see scope for further GBP declines from here over the short-term," MUFG adds.