Societe Generale Research discusses GBP outlook and flags a scope for another move lower into the Brexit deadline of October-31.

"Sterling has recovered over half of the 10% it lost in May-August, as Mrs May lost her grip on power and the market, lost its confidence in a no-deal Brexit being avoided. EUR/GBP is now trading almost exactly at its 2-year average level, in the middle of the range covered by peak optimism when Mrs May ruled out no-deal, and peak gloom when Mr Johnson convinced the markets that he was serious about leaving, with or without a deal, on October 31. Parliament appears to have tied his hands on that score but with every public utterance, the PM restates his commitment to leave one way or the other, at the end of October. Meanwhile, his sojourn in Luxembourg did not suggest that he is making much progress in getting a deal and sterling has run out of steam," SocGen notes. A move back to EUR/GBP 0.91, which could take GBP/USD back under 1.21, seems a pretty high risk in the next few weeks," SocGen adds.