GBP in need of political courage – Nomura

GBP has underperformed in the G10 space this week as negative headlines from the Conservative Party conference, where a troubled speech from Prime Minister Theresa has led to concerns about her potential resignation and a Conservative leadership election, according to analysts at Nomura.

Key Quotes

“If we see headlines of Theresa May’s resignation, we’d expect the pound to suffer and quickly. Nonetheless, if Tory rebels look to the long game, we think it’s too early to push for that resignation and we’ll go back to trading the BoE and upcoming EU negotiations, both of which may present upside surprises versus low market expectations. We remain tactically short EUR/GBP into the BoE’s November inflation report.”