GBP to underperform, weakness will be more evident versus EUR – MUFG

The Pound was the worst performing G10 currency in September. Economists at MUFG Bank analyze GBP outlook.

GBP gains to reverse further

We suspect the BoE has already overdone it with tightening and see potential for rates to soften relative to other major developed economies.

We see GBP underperformance from here and in circumstances of a weakening Dollar, weakness will be more evident versus EUR.

EUR/GBP – Q4 2023 0.8600 Q1 2024 0.8750 Q2 2024 0.8800 Q3 2024 0.8850

GBP/USD – Q4 2023 1.2150 Q1 2024 1.2570 Q2 2024 1.2730 Q3 2024 1.2660