Since the onset of the banking sector turmoil last Thursday, the Pound is the second best performing G10 currency. Economists at MUFG Bank expect GBP to remain resilient.

GBP/Risk correlation is weakening

“A turn higher in risk aversion and a pause from the BoE could test the recent resilient performance of the Pound.” 

“The correlation between GBP and risk has weakened of late which may reflect some improved fundamentals.”

“Improved fiscal credibility, greater political stability and a shrinking current account deficit should all help to limit the fallout for the GBP.”