UBS maintains constructive view on sterling despite fiscal risks

UBS remains constructive on sterling even as it flags risks from the gilt market and the UK fiscal backdrop. The bank’s note focuses on relative pound performance versus the euro, with a EUR/GBP target of 0.8500 for both end-Q3 and year-end. While the outlook is still positive for sterling, UBS says policy developments and the formation of incoming Prime Minister Andy Burnham’s government will be closely watched. The article suggests the pound may stay supported on an intermediate horizon, but policy uncertainty and fiscal concerns could limit gains or create volatility. In market terms, this is a mildly supportive research call for GBP/USD sentiment, though the direct forecast cited is for EUR/GBP.