GBP/USD Exchange Rate Rallies on Brexit Reversal Suggestions
The Pound US Dollar (GBP/USD) exchange rate leapt higher on Tuesday on the back of comments from a top EU official who suggests it is still possible to reverse Brexit.
At the time of writing the GBP/USD exchange rate is currently up around 0.7% from this morning’s opening rate, leaving the pairing up roughly a cent from the week’s worst levels.
Pound US Dollar (GBP/USD) Exchange Rate Surges as UK Told it Can Still Revoke Article 50
The Pound (GBP) was back on the offensive against the US Dollar (USD) this morning as markets cheered remarks from a top-EU lawmaker in which it was suggested Brexit could still be reversed.
In answering a query from a group of Scottish Politicians, the opinion of the European Court of Justice’s Advocate General, Manuel Campos Sánchez-Bordona was that the UK should be able to revoke article 50 without the consent of other EU members.
Just in: Britain can decide to withdraw its notification to leave the EU without seeking permission of other remaining member states, according to advice to judges at the European Court of Justice https://t.co/aysBXoFpPH
— Financial Times (@FinancialTimes) December 4, 2018
While the opinion is non-binding, it’s expected the ECJ’s final ruling on the issue would reach a similar conclusion.
The news helped to turbo charge GBP/USD this morning, on hopes it leaves the door open to the UK staying within the EU if Theresa May’s deal is voted down next week.
At the same time the US dollar remains under pressure this afternoon as demand for the US currency continues to be clipped by easing global trade tensions as well as an increasingly speculation that the Federal Reserve may slow down or pause its monetary tightening in 2019.
GBP/USD Exchange Rate Forecast: UK Services PMI to Undermine Sterling?
Outside of Brexit, movement in the the Pound US Dollar (GBP/USD) exchange rate in the latter half of the week may also be impacted by the release of the UK’s latest services PMI on Wednesday.
This is likely to see Sterling retreat as economists forecast growth in the UK’s all-important service sector is likely to have remained subdued in November.
Meanwhile the US will publish its own Services PMI on Wednesday, potentially lifting the US Dollar if growth in the sector remained robust last month.
However the main focus for USD investors this week is likely to be on the release of the latest US payroll figures on Friday, with the ‘Greenback’ strengthening if November bought another solid expansion in the US workforce as analysts predict.