FXStreet reports that economists at MUFG Bank expect cable to suffer some downside pressure in the short-term.

“MPC member Gertjan Vleighe mentioned the scenario of an earlier than expected rate hike by the BoE. The speech was a detailed and interesting look at what bond yields are telling us about investor expectations and concluded with three key scenarios – the central one being similar to the MPC’s central projection outlined in the May MPR. The prospect of a rate hike by Q2 2022 presents a lot of ‘ifs and buts’ with this scenario that suggest this bounce in GBP could easily correct.”

“While we have a bullish view on the pound, the catalyst for this bounce yesterday may not be sustained. We also need to monitor the very near-term risk of the Indian variant of COVID-19 potentially derailing the full reversal from lockdown scheduled for 21st June. We could well see some reversal of GBP gains over the short-term.”