GBPUSD has continued to rebound over the past week climbing above the high from 13th September at 1.1738. In the view of economists at MUFG Bank, there is room for Cable to rebound further on back of USD sell-off.

GBP under-performance against most of the non-USD G10 currencies to go forward

“While there is room for the rebound in Cable to extend further up towards the 1.20 level in the near-term as the USD is correcting lower from significantly overvalued levels, we do not expect the GBP to benefit against other G10 currencies given the weak growth outlook in the UK and ongoing scaling back of BoE rate hike expectations.”

“We have decided to switch our short GBP exposure from against the EUR to the JPY to reflect more confidence that yields in the UK and globally are peaking out.”