Research Team at Nomura, suggests that the Trump does not mean Softer Brexit but does mean position reduction for the GBP.
“It’s an interesting notion that Donald Trump’s (or “Mr Brexit’s”) election win could lead to a softer outcome for Brexit. The argument goes that it could lead to an improvement of the UK’s negotiating position when dealing with the EU, with the UK now at “the front of the queue” with the US in trade talks. It seems plausible, but we should remember the EU’s first priority is self-preservation. The rise of populism within its own borders is more likely than not to lead to the EU driving a harder bargain with the UK. If the UK were to receive a favourable deal it would serve to validate the arguments put forward by the EU’s Eurosceptic parties.”
“In terms of Mr Trump’s view on NATO, it could see the UK try to use the uncertainty to its advantage in EU negotiations but it’s unlikely to materially change the outcome. For GBP there is a high degree of Hard Brexit priced in (about 60- 70% in our view) and positioning is still short when the trend looks to have stalled for the time being. So while we think next year GBP should find its Hard Brexit equilibrium, for now the “Trumpflation” trade and a self-fulfilling pain trade position reduction flow should dominate, and this should see GBP outperform in the short run.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.