MUFG are of the view that the BoE has already tightened monetary policy too much and that there is thus the potential for UK rates to 'soften' in comparison to other developed market economies.
MUFG project GBP to underperform from now, and add that in the case of a weakening USD this underperformance will be more evident against the EUR.
GBP/USD projections for the year ahead are not lower:
- Q4 2023: 1.2150
- Q1 2024: 1.2570
- Q2 2024: 1.2730
- Q3 2024: 1.2660
EUR/GBP, same
- Q4 2023: 0.8600
- Q1 2024: 0.8750
- Q2 2024: 0.8800
- Q3 2024: 0.8850
