UK government action triggers broader relief rally for risk assets. However, this is just a temporary setback for the US dollar, economists at MUFG Bank report.

GBP unlikely to continue to strengthen once the initial relief rally fades

“We are not convinced that the UK’s weak macro fundamentals justify the pound continuing to strengthen once the initial relief rally fades.”

“We see the broader US dollar sell-off as just a temporary correction lower while the Fed remains committed to tighter policy and fears over a hard landing for the global economy remain in focus.”