GBP to weaken in Q1, but buying on dips could emerge – BAML

Analysts at BAML expressed their take on the GBP price-outlook for 2017 in its latest report titled " FX Viewpoint: 2017: the 51 weeks ahead."

Key Quotes:

“We stick to our contrarian year-ahead short EUR/GBP trade. UK data remains very strong, despite Brexit uncertainties.”

“We do expect GBP to weaken following activation of Article 50 in Q1.”

“However, recent UK government statements indicating their intentions to agree on a transition period, following the Brexit negotiations and until the new trade arrangements with the EU are in place, suggest GBP upside in the medium term.”

“Political risks in the Eurozone could also support GBP in this timeframe.”

“Having said that, we see further GBP weakness if the UK and the EU do not agree on a transition period.”