MUFG Research sees limited scope for GBP to be impacted by the ongoing political uncertainty in the UK.

"We have had client inquiries in regard to the potential impact on GBP from the escalated political uncertainty given the increased call for PM Boris Johnson to resign. Firstly, we doubt we have arrived at that juncture. As we saw yesterday in Prime Minister Questions, for now PM Johnson can use the ongoing inquiry into whether No.10 broke covid restriction rules to stay where he is and hope the current furore will die down before the conclusions of the inquiry are made public

Secondly, we do not see a new PM as dramatically changing policy to a degree that would impact GBP performance," MUFG notes.

"With the UK ahead of other major developed economies in regard to the Omicron wave and the roll-out of booster jabs, GBP will likely see limited impact from the uncertainty over PM Johnson’s future," MUFG adds.

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GBPUSD daily chart
GBPUSD daily chart