UK politics to remain main driver of GBP ahead of EU Summit - Nomura

Nomura FX Strategy Research Team offers its outlook on the GBP ahead of the important EU summit on 14-15 December.

Key Quotes:

"Our main scenario remains that the UK and EU reach an agreement on the transition deal, but in the near term, UK politics will likely be the main driver of GBP.

...Now GBP's negative reaction is more concentrated against the traditional safe-haven currencies, CHF and JPY.

Thus, if UK political uncertainty keeps rising, CHF and JPY will likely face appreciation pressure into the important EU summit on 14-15 December. If an agreement is reached then, we would a small relief rally in GBP/CHF and GBP/JPY. 

While they could face downside pressure in case of no deal.”