Given there are many other risk-on currencies, why choose the Pound? Well, first the Bank of England still seems poor at communicating with the markets. The previous Governor, Mark Carney, was dubbed the unreliable boyfriend for that reason. The current Governor, Andrew Bailey, seems no better, and the markets are quick to punish the currencies of central bankers who miscommunicate their monetary policy intentions.
Second, political risk has increased in the UK as Prime Minister Boris Johnson has repeatedly stumbled, and has also angered the more libertarian wing of his ruling Conservative Party. There is no General Election scheduled in the UK until May 2024, and the Conservatives have a large Parliamentary majority, but a leadership challenge would still unsettle Sterling.
Second, political risk has increased in the UK as Prime Minister Boris Johnson has repeatedly stumbled, and has also angered the more libertarian wing of his ruling Conservative Party. There is no General Election scheduled in the UK until May 2024, and the Conservatives have a large Parliamentary majority, but a leadership challenge would still unsettle Sterling.