Nomura FX Strategy Research discusses GBP/USD outlook and assigns a 70% probability that there will be enough political for the UK to resolve the border issue in a matter of days.
1- "If progress is made it will take the market by surprise and we would start hearing of plans for a transition deal, this would move GBP/USD higher by 2-3% in short order," Nomura argues.
2- "If a delay by the DUP causes negotiations to fall through we think this would see GBP/USD drop 1.5% or so, back to where we were before the idea of progress was in market pricing. The tail risk of all this leading to a collapse in government is a very low probability in our view, but is likely to see GBP/USD break below 1.30 toward the high 1.28 levels or so," Nomura adds.
Source: Nomura Securities Research