UK will stand out from other key G10 economies and is set to underperform. Thus, economists at MUFG expect further GBP depreciation, with the GBPUSD trading below the 1.10 mark.

Pound remains very vulnerable to the downside for now

“The Pound remains very vulnerable to the downside for now. The US and even the eurozone look set to perform better than the UK and that economic underperformance relative to most of the rest of the G10 will likely be reflected most easily through GBP depreciation.” 

“The grim GDP forecasts from the BoE don’t even incorporate the coming fiscal consolidation to be announced on 17th November.”

“We remain bullish on the US Dollar, a view we remain confident on after the FOMC meeting yesterday. Hence, the greater traction for GBP weakness will remain through GBPUSD. A period trading back below the 1.1000 level looks increasingly likely.”