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The pound moved up and down on contradicting Brexit headlines. What’s next?

Here is their view, courtesy of eFXdata:

MUFG Research discusses GBP outlook and maintains the view of  buying dips as a medium-term trade into year end but flags some caution in the near-term.

“Despite the general positive momentum,  some caution may be necessary,  and the pound may have ridden out its short term headline driven rally to 1.3000.

Last week was a bumper week for the pound, as positive Brexit developments materialised and a cautiously optimistic and increasingly hawkish BoE signalled a faster rate hiking pace in the event of a smooth Brexit. It gave the markets a taste for what may happen for the pound going forward if a “No Deal” outcome is avoided. That said,  there may still be further twists and turns before a Brexit deal is finalised and legislated for in the coming months.

Overall, we continue to believe that the pound is a buy on dips based on an assumption that a “No Deal” outcome will be avoided,” MUFG argues.

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