Crisis averted but financial conditions to remain tight and pound to remain weak - MUFG

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Crisis averted but financial conditions to remain tight and pound to remain weak - MUFG

<p>MUFG Research maintains a bearish bias on GBP over the coming weeks.</p><p>"The UK government has been able to more fully regain market
confidence after it brought forward plans to further tighten fiscal
policy encouraged no doubt in part by the BoE's decision to bring an end
 to temporary emergency support for the gilt market...Overall,
the measures give us more confidence that the crisis of confidence in
the gilt market should now ease. However, it is likely that financial
conditions will remain tighter than prior to the mini-budget
undermining economic growth in the UK. The tightening of fiscal policy
including spending cuts makes it more likely that the UK economy will
fall into recession," MUFG notes.</p><p>"In these
circumstances, we are not convinced that the UK's weak macro
fundamentals justify the pound continuing to strengthen once the initial
 relief rally fades. Similarly, we see the broader US
dollar sell-off as just a temporary correction lower while the Fed
remains committed to tighter policy and fears over a hard landing for
the global economy remain in focus," MUFG adds.</p><p>For bank trade ideas, <a href="https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD" rel="nofollow" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD&source=gmail&ust=1666234835097000&usg=AOvVaw1mkAUpj5D6XCqjLrfAgYVD">check out eFX Plus</a>. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. <a href="https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD" rel="nofollow" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD&source=gmail&ust=1666234835097000&usg=AOvVaw1mkAUpj5D6XCqjLrfAgYVD">Get it here</a>.

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                This article was written by Adam Button at forexlive.com.

Source: Crisis averted but financial conditions to remain tight and pound to remain weak - MUFG

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