Better scope for GBP gains versus EUR than versus the USD – MUFG

Economists at MUFG Bank discuss GBP outlook.

Investors believe the BoE is acting aggressively enough to hit growth and potentially bring inflation lower

The 2s10s UK Gilt curve has inverted sharply of late and this is the strongest indication that investors now, for the first time in this tightening cycle, believe the BoE is acting aggressively enough to hit growth and potentially bring inflation lower.

The much weaker-than-expected PMIs from Europe last week may mean there is better scope for GBP gains versus EUR than versus the Dollar given the broader global growth concerns remain elevated.