"The election, high court ruling and less dovish BoE have distracted investors playing GBP shorts.

There is some speculation that the Trump win can translate into a better political position for the UK vis-à-vis the EU, but the logic is not convincing. US-UK trade has not been an issue. Trade weighted rate differentials have moved against GBP since last week and should stay low without material local stimulus. The Autumn Statement in two weeks is significant in this regard, but doesn't look a catalyst. We think rates and FX vol stay supported while Brexit back-and-forth persists. The January Supreme Court ruling we suspect will not alleviate policy uncertainty. As much makes us hesitant to expect direct investment inflows yet.

We still favor shorts in GBPUSD".

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