Europe will be major in 2017 for FX space - Nomura

Analysts at Nomura explained that political risks in Europe will be one of the key drivers of the FX market into 2017. 

Key Quotes:

"Sensitivity analysis shows strong momentum in anti-EU party support in the euro area and higher Brexit stress in the UK financial market tend to weaken both EUR and GBP against USD. 

Higher anti-EU party popularity could increase Brexit stress in the UK financial market, as UK external deficit financing will be more difficult, UK economic momentum could be hit, and EU governments’ “Hard Brexit” stance could be firmer. 

After the US presidential election, GBP initially traded strongly likely thanks to position squeezes. However, we judge the development of European politics will be a major driver of GBP and EUR into 2017 and a further fall in GBP/USD is likely to us."