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.
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