GBP: Any relief on removal of political instability will likely be only temporary – MUFG | Forexlive

MUFG Research maintains a bearish bias on GBP into year-end.

“The removal of political instability in the UK is certainly a
positive and could over the short-term provide some further support for
the pound. However, we suspect gains could be brief and would
caution over how much further this news can lift the pound. The pound is
already at levels that existed prior to the lurch into political
uncertainty and the tax rises / spending cuts that are coming will mean
the UK will be hit by a deeper recession than elsewhere,” MUFG notes.

“IMM positioning data showed to last Tuesday Leveraged Funds were GBP
sellers as PM Truss began to lose her grip on power and political
turmoil escalated. So it is certainly plausible we get a further temporary lift but we would emphasise the word ‘temporary,” MUFG adds.

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