FX: Sell EUR/GBP GBP remains a consensus short. Despite GBP appreciating following the High Court decision for a Parliamentary vote to activate Article 50 and the US elections, the market’s short GBP position remains stretched according to our positioning analysis (Chart 44}. Our Global Fund Manager Survey flags short GBP as the strongest consensus view in G10 FX. Our EX & Rates Sentiment survey also suggests that the majority of investors look for some type of hard Brexit. Although we have been arguing for upside GBP risks after the recent flash crash, our baseline projections expect GBP/USD to hit a new low of 1.15 in Q1 after the UK activates Article 50. However, we have argued that GBP tail risks are skewed to the upside. UK data have been strong post-referendum and could continue surprising to the upside. There is room for positive headlines at the political front, if the UK agrees on the transitional period that could extend the current regime until a final trader deal with the EU. A Parliamentary vote on Article 50 activation could reduce the chances of a hard Brexit. And Trump’s victory could lead to an early bilateral US-UK trade deal, while it increases the geopolitical importance of the UK for the rest of the EU. Moreover, we expect markets to become more concerned about political tail risks in the rest of Europe following Trump’s victory in the US elections. Political risks in Italy and France could question the sustainability of the Eurozone, thus weakening EUR/GBP. If Prime Minister Matteo Renzi loses the referendum on the constitutional reform in December, Italy could have a snap election, which the Five Star party could win based on the latest polls. Even if Italy avoids elections in 2017, the next election will take place by May 2018, and markets could become concerned about it earlier if Renzi loses the referendum. The 2017 French election is another concern. President of the far-right party and presidential candidate Marine Le Pen is ahead in the