MUFG Research discusses GBP outlook in light of revising down GBP/USD targets. MUFG now targets GBP/USD around 1.10 and EUR/GBP around 0.97 by year-end.

"We now consider leaving the EU without a deal as the most likely scenario and hence have lowered our GBP forecast levels accordingly. Parliament forcing a general election but then the Conservatives and the Brexit Party winning is our likeliest scenario. We believe rate cuts would be forthcoming and now expect two 25bp cuts in December and January following a no-deal or disruptive departure. With our 60% probability now attached to no-deal , we see GBP/USD decline to close to 1.1000 by year-end. We expect some GBP recovery in 2020 based on measures taken through restarted negotiations to ease the negative impact and based on the assumption of fiscal stimulus implemented to counter the economic impact in the UK," MUFG adds.