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GBP: Unlikely to find a way back - Nomura

Analysts at Nomura are very surprised that Theresa May has pushed a deal through the cabinet without maintaining Dominic Raab's backing and think that GBP is unlikely to find a way back from this in the short term.

Key Quotes

“We think the market enjoys a narrative and we're heading towards the need for hedging flows for the downside to drag GBP lower into the parliamentary vote.”

“In our view the market will be buying downside in GBP positioning on the likelihood of a leadership vote of confidence.”

“We still expect the UK to avoid downside tail risk scenarios, but believe in the next 24-48 hours the market narrative will turn rather sour as to what happens next.”