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Oct 24 - 05:00 PM
GBP: To Continue Trading With A Risk-Premium But A No-Deal Outcome Mostly Priced In - Nordea
First appeared on eFXplus on Oct 24 - 03:30 PM

Nordea Research discusses GBP outlook and thinks that as the risk of a “no-deal” is still material, the GBP will continue to trade with a risk premium for a while yet.

"Our house view remains that the parties will reach a deal (likely a Canada-plus model), and thus we expect an abating risk premium in the GBP into 2019.
In congruence with our Brexit forecasts, we believe the markets have already priced in a signi´Čücant risk of a “no-deal” outcome, and that any deal reached is GBP positive.

Hence a EUR/GBP fair value of 0.87 in mid-19 and 0.83-0.85 in end-19 and beyond, assuming either a Norwegian (soft) or Canadian (hard) scenario for the Brexit. In a “no-deal” scenario the GBP will take another massive beating," Nordea argues.

Source:
Nordea Research/Market Commentary

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