Brexit Risks Remain as PM May to Keep Pushing the Agreement Forward

The next few weeks will likely define the Brexit process as a whole, with Prime Minister Theresa May heading for a showdown with the country’s lawmakers at a parliamentary vote.

The uncertainty has caused a wave of activity across the City of London, with currency experts busy predicting how sterling could trade during this volatile period.

One forecast from Japanese investment bank Nomura suggests the pound could jump approximately 6 percent on that vote to 1.36 against the dollar. It currently trades at closer to $1.28.

The call from Nomura strategists highlights that if all goes well for May and she gets enough backing for her Brexit withdrawal agreement, there will be a rally for the British pound.

“We believe the market currently prices more risk of hard Brexit than remain, so if we hit the ‘modal’ outcome the result is a sell-off in gilts (U.K. government bonds) and (as) rally in FX (foreign exchange),” Nomura said in a research note Thursday.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza