GBP/USD: The risks for cable in Q3 remain to the downside – MUFG

GBP continues to underperform but not as badly as EUR. Still, the British pound is set to move downward in the third quarter, economists at MUFG Bank report. 

GBP downside risks in near-term 

“Political uncertainty has had limited impact on GBP so far. Liz Truss's victory could trigger a more volatile GBP reaction. Looser fiscal and tighter monetary policy combination is normally supportive for a currency.”

“The risks for cable in Q3 remain to the downside given GBP tends to perform poorly as global financial conditions tighten. Beyond then, we expect cable to recover as the USD weakens more broadly.”