Bank of America Global Research maintains a bullish bias on GBP over the medium-term.

"Like France, the UK faces budget proximity risk, yet GBP has outperformed, only lagging JPY & USD over the past month. GBP is no longer the fiscal punching bag within G10 FX, partly due to "safety in numbers", but also more fundamental improvements. Sticky FDI inflows have provided a meaningful fillip to the UK's balance of payments. Gilts are under pressure due to global moves but outperforming cross-market, aided by the BoE's overhaul of the QT sales process. Finally, strengthening EU-UK ties now appears a more focused objective for the UK government," BofA notes.

"While serious negotiations are unlikely near-term, the prospect of all options being on the table is a medium-term positive for GBP. We stay constructive," BofA adds.