The outperformance of the Pound is likely coming to an end – MUFG

Since the end of August through to now, the Pound is the top performing G10 currency, having advanced 4.9%. However, economists at MUFG Bank expect GBP underperformance from here.

Underperformance set to re-emerge 

“It is the imminent economic disruption from strikes that could soon start to undermine sentiment once again. We are not convinced market participants have priced appropriately the disruptions that are coming and if these strikes materialise as scheduled, the hit to confidence and growth could be notable. Train operators, Royal Mail, nurses in the NHS, ambulance technicians, bus drivers, road maintenance workers, Heathrow ground handlers, the Eurostar, and civil servants are all scheduled to strike in December and announced strikes of nearly 50 days have so far been confirmed with more yet to be announced.”

“The global risk-on that has been evident since mid-October looks to be coming to an end while domestic specific factors here in the UK will likely undermine confidence further with December kicking off the winter with severe disruptions and with more to come.”