Danske Bank with a take on UK politics
Say that the near-term likelihood of a soft Brexit has fallen, taking GBP lower
- We do not expect the likelihood of a hard Brexit will rise further and the risks are tilted for a somewhat stronger GBP (fading fear of hard Brexit)
Danske does not see the political situation (yet) with the same severity as late last year, when the GBP was only slightly weaker than seen today.
- On this side of summer, we do not expect a convergence towards one of the (pound negative) Brexit outcomes
- hence expect very limited further weakness in GBP
- from the current level, small changes in the perception of the possibility of a softer Brexit could cause a non-linear reaction in favour of GBP strength
