Analysts at TD Securities look to the broad trade-weighted GBP for guidance for key levels. In their view, GBP/USD is stretched around 1.0450ish.

A twin deficit meets a crisis of confidence

“With the Bank of England already behind the curve, an emergency meeting or larger hikes won't do much besides a knee-jerk GBP bounce.”

“The UK already ran one of the G10's highest current account deficits before the terms of trade shock, leaving GBP doubly exposed to capital flight and too little (real) yield pickup.”

“Given lows seen in the trade-weighted broad GBP index over the past ten years, GBP/USD could stabilize around 1.0450 in the months ahead, though the nature of the fiscal surprise suggests a risk of a further 15% decline in the currency before accounting for a confidence crisis.”