Goldman Sachs Research shifts to a neutral bias on GBP in the near-term.

"We see near-term risks to Sterling as being more balanced, and closed out of our tactical short GBP/USD recommendation. Over the medium term, we continue to expect Sterling underperformance, driven by bouts of fiscal premium and an unwind of BoE hike pricing. On the former, after some question marks around funding propositions in week one, fiscal news in the second week of the Burnham government has been comparatively light," GS notes.

"We suspect this largely remains the case until closer to the Autumn budget (announced for October 28), arguing for a passage of more muted vol from swings in fiscal premia. But with many of the fundamental constraints to fiscal policy still in place, and recent rebounds in energy prices and Gilt yields amplifying those challenges, we remain of the view that when that fiscal vol does return, it is likely to produce short-lived but asymmetrically negative bouts of Sterling pressure," GS adds.