Bank of America Global Research discusses GBP outlook and maintains a structural bearish bias.
"The breakdown in GBP liquidity conditions since the Brexit referendum is an important anchor in the way that we have been analyzing the pound. Using turnover statistics from the BIS Triennial Survey alone one would conclude that the depth of the GBP market should have provided some cover against volatile market moves. This has not been the case and, in our view, Brexit is likely to permanently alter the way in which investors view the pound," BofA notes.
"In summary, we believe GBP is in the process of evolving into a currency that resembles the underlying reality of the British economy: small and shrinking with a growing dual deficit problem similar to more liquid EM currencies.
We remain defensive on the pound but to avoid USD exposure we believe investors should focus their attention on a lower GBP versus EUR, JPY and CHF," BofA adds.