GBP: Base Case For No-Deal Brexit & 2 BoE Cuts; GBP/USD To Fall Towards 1.10 By Year-End – MUFG


The British pound has come under immense pressure as PM Boris Johnson accelerated his preparations for a no-deal Brexit. Where next?

Here is their view, courtesy of eFXdata:

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,” MUFG notes.

“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.

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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