Sterling is outperforming, but, still potential Brexit obstacles - Nomura

Analysts at Nomura explained that GBP has outperformed this week, with the news that a number for the UK’s divorce bill has been agreed. 

Key Quotes:

"There are still potential obstacles: we still need clarity on citizens’ rights issues and the EU side will need to confirm that it is willing to leave the full resolution of the Irish border situation until Phase II of the talks."

"However, the market which we have argued has been too pessimistic on the Brexit negotiations for the past month or two is now seeing that real progress is being made."

"There are also reasons to be more optimistic on the UK banking sector outlook. We expect a grind higher in GBP pairs, with EUR/GBP down to 0.87 our first target."

"The US tax reform progress makes GBP/USD a trickier pair to forecast, but real money positioning is yet to shift and so we expect a further unwinding of positions that could take the pair to 1.40 by 2018."