With risk premia coming down globally, investors will be looking around for laggards. GBP's risk premium has remained high for very good reasons, mostly associated with the upcoming June 23 EU referendum.
However, with risk premia melting away elsewhere, we think GBP will look increasingly supported.
From now it may take persistently bad news to keep GBP near current levels, while a marginal improvement in the news flow may be already sufficient to push GBP higher.
