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If these forecasts are correct, the pound isn't out of the proverbial woods yet.
The pound-to-dollar is set to fall a few big figures from current levels at around 1.36 in the coming weeks, according to a new currency market analysis by a major global investment bank.
Mizuho has confirmed in its latest monthly forecast that pound sterling is set to drop against the dollar as UK growth will soon disappoint amidst a new terms of trade shock and potential political upheaval in the summer months.
"Along with the EUR, GBP is likely to underperform due to the terms of trade shock, despite the improved carry differential due to hikes being priced in," says Mizuho.
Although data surprised to the upside in April, economists at the bank think that performance won't last long "given the energy costs firms will be facing and this could be last minute panic orders before a supply crunch arrives."
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The war in Iran has sent oil and gas prices surging, which has, in turn, pushed the cost of government borrowing higher. UK bond yields - the interest rate paid by government bonds - have tracked oil prices higher and raised concerns about UK debt dynamics.
For now those higher yields are proving attractive for international investors and this is helping the pound stay aloft. But that dynamic only stays in place if confidence holds up.
Mizuho warns the Iran crisis presents an emerging terms of trade shock, and that will ultimately be a negative for the pound. Then there's politics to consider, too:
"As long as the Strait of Hormuz remains closed GBP's valuation will decline in line with the terms of trade shock. A new Prime Minister may also add a political risk premium over late Spring/early Summer," says the report.
"Labour’s popularity with the public has collapsed, Keir Starmer struggles to achieve policy goals even with a majority. It opens the risk to leadership challenges for Keir Starmer to come (May local elections the decider). It’s a key variable for long end Gilts, with a new leader expected to be less committed to fiscal rules and could lead to steepening," it adds.
Mizuho forecasts pound-dollar at 1.30 by June and euro-pound between 0.86-0.88 (which puts pound-euro between 1.1630 and 1.1360.
