There is a possibility that British Prime Minister Theresa May will resign within a few days after a devastating vote. Still, Nomura does not believe in tough Brexit, waiting for the stabilization of the political situation in the country and the growth rate of sterling. Thus, currency strategists explained the opening of a short position in EUR / GBP pair from 0.8880.
London representatives of the bank reported that the position of British Prime Minister Theresa May looks quite constructive. Her desire to lengthen the term of Article 50 of the Lisbon Treaty and the intention to begin inter-party negotiations on the country's withdrawal from the group will most likely allow the British government to retain power.
If a vote of no confidence is announced to the government, the pound may drop by 3%.
The bank estimates that next week traders will focus on what Ms. May can offer as a backup plan.
Many political analysts believe that the British Prime Minister will once again "stand on his feet." May lost in the House of Commons, but "there is no immediate threat to her position." Theresa May will remain in power, as the Democratic Unionist Party and the Conservatives, who voted against her unpopular EU exit deal, will support her.
Note that Ms. May herself contacted, saying that the British government is already busy searching for an acceptable Brexit plan, which would receive the support of parliamentarians.
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