The Pound has outperformed since the end of last week. Economists at MUFG Bank expect the GBP/USD pair to advance nicely towards 1.30 this year.

A better year ahead for the Pound after weak performance in 2022?

“While it is already well anticipated that the UK economy is in recession, the recent favourable energy price developments increase the likelihood that the downturn could be shallower and shorter than expected. In the BoE’s latest projections, they expected that the recession could last until the middle of 2024. The downbeat assessment leaves more room for upside surprises in the year ahead.”

“We are now forecasting a more bullish outlook for the pound later this year and expect Cable to rise up towards the 1.3000 level.” 

“We believe that we have moved past peak pessimism towards the Pound, although remain wary that strike action alongside elevated wage growth continue to pose downside risks by potentially contributing to a more persistent period of higher inflation in the UK.”