Scotiabank note that "the path to the UK's....>

CABLE: Scotiabank note that "the path to the UK's EU departure lounge remains

fraught with risks yet time for a deal is running short, with the UK & EU aiming

to get an agreement on how the UK will exit the EU in place before year-end. The

GBP has rallied on reports that the EU wants to keep close ties with the UK but

this is nothing new & does not necessarily mean Brussels will make any

concessions on key issues that remain to be resolved. Uncertainty seems likely

to weigh on the GBP again in the next few months. GBP/USD is trading quite

"rich" relative to our fundamental fair value estimate (1.19 currently, based on

short-term spreads & relative equity returns). Near-term swings are subject to

fluid USD sentiment & we recognize that speculative positioning is already quite

aggressively short the GBP, which may restrain GBP weakness. However, the risk

of an adverse (for the UK) outcome to Brexit negotiations in the next few months

appears non-negligible & is not fully reflected in the exchange rate at this

point we feel. Uncertainty should prevent near-term gains beyond the 1.30/1.31

range & we are inclined to look at these sorts of levels as a selling

opportunity in the short run at least."