For the pound, the path forward is heavily contingent on the performance of the UK economy, and to a lesser extent how the Eurozone economy is travelling. Hence, from our perspective, a more positive outlook would require the economy to continue delivering positive surprises relative to market consensus. This may result from ongoing resilience in household consumption, or an upswing in business investment. Ongoing strength, combined with stubbornly high inflation could see the Bank of England press on with additional aggressive interest rate hikes. While positive in the short term for the exchange rate, over the longer run, this could result in a sharper economic downturn and larger pull-back down the track.