GBP short squeeze is short-lived - BNPP

Research Team at BNP Paribas, notes that the GBP bounced early Wednesday on news that UK Prime Minister Theresa May had accepted that Parliament should be allowed to vote on her plan for taking Britain out of the European Union.

Key Quotes

“Even as she stated that there should be no attempt to block Brexit or undermine the negotiating position of the government. However, in subsequent question time comments, she declined to elaborate on the extent of parliament’s involvement and the currency gave back some of its gains.

We continue to see scope for the GBP to bounce on positive news surprises given extreme short positioning and very cheap GBP valuations.  Our BNP Paribas STEER™ model remains long GBPUSD and short EURGBP. We are heading into crunch time for the GBP as the various parties stake out negotiating positions, so we would expect news flow to remain rather challenging in the near-term.”