Here is why J.P. Morgan is backing down from major positions in U.K stocks

J.P. Morgan is backing away from its key overweight call of 2016, cutting its U.K. stock position to neutral and turning more upbeat on eurozone equities.

U.K. benefitted this year from large [emerging market] exposure, from falling Gilt yields and from weaker GBP. According to JP Morgan Emerging markets will take a step back, which will remove one of the drivers for the U.K. Also the acceleration in U.K. inflation could weigh on consumer play.

London’s FTSE 100 UKX s so far up 12% in 2016, easily outpacing any other major equity market in Europe. The plunging pound GBP. n the wake of the U.K.’s Brexit vote in June has been credited as one of the main reasons the FTSE has zipped past other European indexes this year. However, the Brexit effect won’t continue to be a boon for U.K. stocks, the J.P. Morgan warned. If politics get more uncertain, “further GBP weakness might become a negative signal for U.K. assets,

Where there could be positive surprises instead, is in the eurozone. Lifting the region to overweight, the bank said valuations have improved and that the bloc’s equities work as “an interesting hedge against potentially rising FX and bond volatility.”

Other top European picks at JPM include Total SA FP, TOT, Thyssenkrupp AG TKA, Ryanair Holdings PLC RY4C and Heineken NV HEIA.