Credit Agricole CIB Research discusses GBP outlook and maintains a bearish bias, expressing that via holding a short GBP/USD targeting a move towards 1.20.
"We maintain our cautious view on the GBP and expect further underperformance ahead. Indeed, persistent growth and inflation headwinds related to both Covid-19 and Brexit should keep the BoE on high alert and may thrust it back into action by August," CACIB notes.
"Looking ahead into this week, market focus will be on the UK PMIs, which are likely to extend their recent recovery. That said, this may not help boost the market outlook for the economy given the lingering uncertainty related to Brexit and, to a lesser extent, the concerns about a second wave of Covid-19 infections. Moreover, with the global rally in risk and commodity prices having stalled, the GBP outlook vs the USD and EUR could take a turn for the worse in the coming weeks," CACIB adds.