OCBC's strategists Sim Moh Siong and Christopher Wong shift their British Pound (GBP) view from bearish to neutral, citing easing fiscal concerns and attractive carry that have helped GBP recover from early May losses. Despite soft United Kingdom (UK) data and ongoing political risks, including potential Labour leadership changes, the bank expects stretched short positioning and possible lower Oil prices to limit GBP downside.

Neutral stance on the Pound

"We shift from bearish to neutral on the GBP and revise our end-2026 EUR/GBP forecast to 0.87 from 0.89."

"Politics remains a key focus. A potential win for Andrew Burnham at the 18 June Makerfield by-election could trigger a Labour leadership contest in late August or early September. Burnham is widely seen as a likely successor to Prime Minister Keir Starmer according to recent YouGov polling."

"Despite soft UK data and ongoing political risk, GBP has recovered from early May losses."

"Easing fiscal concerns, supported by Burnham’s commitment to discipline, and relatively attractive carry have helped stabilise the currency."

"Positioning also matters. Elevated GBP shorts could unwind further, especially if oil prices ease, which tends to support risk-sensitive, oil-importing currencies like GBP."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)