MUFG Research discusses GBP outlook and maintains a bullish bias expressing that via holding a long GBP/USD exposure targeting a move towards 1.4125.
"We are maintaining our long cable trade idea. The GBP continues to outperform at the start of this year supported by the rapid roll out of vaccines in the UK. It has prompted the BoE to adopt a less dovish policy stance. The BoE has signalled that they are currently happy with monetary policy settings and have provided no clear signal of further easing," MUFG notes.
"We remain sceptical over the sustainability of the USD’s recent rebound given the ongoing decline in US real yields. A break through recent highs for cable between 1.3700 and 1.3750 would open the door for further cable upside," MUFG adds.