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Analysts at TD Securities think Brexit risks will soon become a tradeable theme for sterling again.

Key quotes

“We do not think there is sufficient risk premium priced into GBP at the moment; much of the rise in the UK daily news index, for instance, has occurred over the acute phase of the pandemic.” 

“While cable put premiums have richened, there remains an appreciable disconnect by this measure of uncertainty that has approached Brexit referendum levels. There is plenty of room for Brexit risk premia to build into the sterling price.”

“We view GBP/USD rallies toward 1.25 should be faded. We remain short cable and target a move to 1.18 in the coming weeks.”