GBP During the Campaign Period - Nomura
Research Team at Nomura, suggests that currently, bookmakers’ odds imply the probability of Brexit is around 33%.
Key Quotes
“If
this were to increase to 50-50, our beta study would imply the reaction
in GBP/USD would be about a -3% move, which would put GBP/USD at 1.37
from current levels. Markets have demonstrated their non-linear nature
before though, and at that 50-50 level of implied probability of a
Brexit, we would not be surprised if GBP’s depreciation accelerates
further.
We will keep our GBP short position here, but are not
looking to add at current levels, unless there is a short-term
positioning squeeze higher, or opinion polls show a clearer shift in
favour of Brexit. Another squeeze is possible in our view, and we keep
judging the 1.44-1.45 level as a good level to add GBP short positions
ahead of the referendum date. Please find the full piece here.
We
also revised our forecast for commodity currencies this week, finding
that AUD, CAD and NZD are all slightly overvalued given current levels
of commodity prices and the rates differential. As such, we believe
these currencies should depreciate this year.
However, we
believe these currencies are likely to depreciate slightly less than
previously expected, with USD/CAD ending the year around 1.35, AUD/USD
at about 0.67 and NZD/USD close to 0.62.”
(Market News Provided by FXstreet)
