Mitsubishi UFJ: If risk aversion sentiment increases, the pound may weaken against the overall market.

Derek Halpenny of Mitsubishi UFJ Financial Group stated in a report that if tensions in Iran escalate, the British Pound may weaken against major currencies. "The Pound has historically performed poorly during times of risk aversion, and as investors shift focus towards growth, yields may turn negative," he said. He also mentioned that the rise in two-year UK government bond yields is the fastest since the 2022 mini-budget, which introduced tax cuts without funding support, impacting growth in the UK during a tightening financial environment. The Pound fell by 0.2% to $1.3309. The Euro rose by 0.1% against the Pound to 0.8653. According to Tradeweb data, the two-year UK government bond yield reached 4.714% on Monday, the highest level since May 2024.