Mitsubishi UFJ Financial Group (MUFG) are bearish on GBP, citing Bank of England interest rate cuts to come:

• We see the pricing for Bank of England (BoE) rate cuts this year as too cautious and expect the BoE to cut by more which will likely see the pound underperform non-dollar currencies later in the year with the US dollar by then weakening more broadly

MUFG also cite energy prices, saying the UK is vulnerable to a surge in gas prices (this in relation to Ukraine refusing to renew a contract to ship Russian natural gas through Ukraine into Western Europe):

• UK lack of storage capacity leaves it more vulnerable to market price moves and has increased fears over further utility price increases this year.
• Higher energy prices will weigh on consumer spending, will undercut business confidence and increase costs

This article was written by Eamonn Sheridan at www.forexlive.com.