Nomura FX Strategy Research discusses GBP outlook ahead of the important EU summit on 14-15 December
arguing that GBP/CHF, and GBP/JPY set to gain in case of reaching an agreement between the UK and EU (Nomura's base case), while they could face downside pressure in case of no deal.
"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," Nomura argues.
