Societe Generale Research sees a scope for GBP/USD hitting 1.20 over the coming weeks.
"The FX story is all about European currency weakness. Germany's vice-Chancellor says we're in a gas crisis; if it gets really serious, it brings much weaker growth and a much weaker euro with it. Currently, the only European currencies to be up against the very beaten-up euro are the pound, the Krone, and the Swiss franc. NOK 'ought' to be much stronger but its volatility, and sensitivity to equities, are putting buyers off," SocGen notes.
"Sterling would be more immune from what is happening in mainland Europe, if weren't for the fact, often forgotten, that the strip of sea between Dover and Calais, is too narrow to insulate the UK economy. Apparently, there's a shortage of geography teachers in England. Cable is still likely to reach 1.20 before EUR/USD reaches parity," SocGen adds.