GBP to be the outperformer in 2017 - BNPP

Daniel Katzive, Analyst at BNP Paribas, expects the GBP to outperform most other G10 currencies in 2017, holding steady relative to a broadly firmer USD.

Key Quotes

“The UK economy faces significant challenges in 2017 as it adjusts to Brexit uncertainty. However, as we have discussed in past Strategy publications, we think current levels of the GBP already price in a “worst-case” scenario for UK capital flows. Moreover, there has already been a marked shift in UK government Brexit rhetoric, focusing less on immigration controls, and more on pro-business measures and the best possible single market access. GBP is trading very cheaply vs its long-term fair value and data suggest EM reserve managers are now comfortably, passively increasing GBP holdings.”