Goldman Sachs expects the pound and gilt yields to gain under its base case that a Brexit deal will eventually be approved by Parliament.
Sees lawmakers rejecting May's agreement on Dec. 11, pushing the pound down by 1%-2%.
However, sees a deal passing in early January, pushing the pound up about 5% to $1.34 and the UK gilt yield curve to move 25 basis points higher from current levels.
“We expect the first vote to fail, but ultimately expect the current Brexit deal, or some variant, to pass through the U.K. Parliament, sending both GBP and GBP yields higher,” strategist George Cole writes.
British pound +0.2% against the dollar at $1.27.
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