AP Photo/Frank Augstein)

The pound may be holding ground after U.K. Prime Minister Theresa May’s Brexit victory in Parliament, but some in the market say investors are too optimistic.

While the currency fell Tuesday after lawmakers rejected a plan to delay Britain’s exit from the European Union in favor of sending May back to Brussels to secure concessions on the withdrawal deal, it’s advanced this year amid hope the two sides will eventually find a way forward. However, given the EU’s refusal to reopen negotiations, some think it is only a matter of time before reality bites and sterling weakness reemerges.

Still, while most strategists now see an increased risk of the U.K. leaving with no agreement on March 29, some expect May will opt instead to try and postpone Brexit, with the pound standing to benefit.

Here’s a roundup of analyst views on the latest developments:

Deutsche Bank AG (Brick Wall)

The German bank is turning neutral on the pound after previously recommending a long position, strategist Oliver Harvey says, as May is “pivoting into a brick wall.”

It is probably not an understatement to say the Malthouse compromise plan “stands zero chance of success with the EU27,” Harvey adds.

The bank now sees the risk of a no-deal Brexit at 15 percent, compared with 5 percent previously.

Nordea Bank AB (Wishing for a Unicorn)

Tuesday’s votes “have pushed the U.K. closer to a managed no-deal exit, as Theresa May will now travel to Brussels and ask for a unicorn,” write Nordea strategists Andreas Steno Larsen and Morten Lund.

They recommend selling the pound versus the euro, targeting levels of at least 89.50 pence per euro.

“We find it hard to justify the current Brexit optimism and would put a larger subjective probability on the no-deal risk than markets do,” the strategists said.

UniCredit SpA (Positive Outlook)

The pound correction has so far been modest, write strategists including Kathrin Goretzki.

This is “in line with our view that the most important driver behind sterling strength over the past few weeks has been the reduced probability of a no-deal scenario, which a large majority of MPs are determined to avoid.”

The bank maintains a positive medium-term view on sterling, and predicts interest in the pound will build up again in the run-up to Feb. 13, when May potentially returns to Parliament with any changes.

Credit Agricole SA (Game of Chicken Continues)

“The game of chicken between the U.K. and the EU entered a critical phase” on Tuesday, write strategists, including head of Group-of-10 currency strategy Valentin Marinov.

“While this much may be largely discounted by the currency markets, what remains very unclear is if a deal is at all possible given the still significant differences between the U.K. and the EU.”

The strategists see the pound relinquishing its recent gains versus euro and dollar, “pushing euro-pound and pound-dollar back closer to 0.89 and 1.29 levels, respectively, where the more recent sterling rally has started.”

Canadian Imperial Bank of Commerce (Delay Likely)

The failure to take no deal off the table weighed on sterling, “as did the immediate pushback to U.K. demands from the EU,” writes head of Group-of-10 currency strategy Jeremy Stretch.

“Sterling downside has proved limited on the likely realization that the March 29 exit date is almost inevitably going to be missed.”This potential for delay suggests that $1.3047 should prove a near-term floor.

BNP Paribas SA (Pound Gains)

“The upshot is that the can has merely been kicked down the road,” wrote BNP Paribas strategists including Parisha Saimbi. “We see an extension as almost inevitable now, even if a deal is eventually passed.”

The French bank predicts the pound will gain versus the Swiss franc as market expectations for a second referendum or a softer Brexit will build.

Bloomberg