Deutsche Bank: Sterling Risk Premium Already Priced In Ahead of UK Leadership Shift

Deutsche Bank’s Shreyas Gopal observes that markets had already priced in the prospect of Andy Burnham becoming UK Prime Minister by the time of the Autumn Budget. As a result, the risk premium embedded in sterling is now broadly reflected in current levels.

Gopal suggests the focus for the pound is shifting to leadership dynamics and associated fiscal risks. The analysis implies limited immediate upside or downside for GBP as the anticipated political outcome has already been discounted.

Investors are likely to monitor any new fiscal announcements from the likely new administration for further direction on sterling.