Brexit News: Sterling (GBP) Soars after EU Dangles Brexit Carrot
Sterling (GBP) and Brexit News:
- European Court of Justice releases Article 50 opinion.
- Sterling jumps and holds gains.
The DailyFX Q4GBP Forecast is available to download.
Article 50 May be Reversed Unilaterally by the UK, Top European Court Opines
The UK can decide to rejoin the EU unilaterally according to advice from the European Court of Justice (ECJ), dangling a Remain-route carrot back in front of UK PM Theresa May. While the advice is not an official ruling, it is clear advice and would likely be passed if the situation arose. This means that if a second referendum was called and Remain won the vote, the UK could go back into the EU, although as it stands, it remains to be clarified if the original terms and conditions would stay the same.
This ECJ opinion comes at a time when the Speaker of the House ruled that MPs will be allowed to debate whether the government should be held in contempt of Parliament by not fully disclosing the full legal guidance of the Brexit Withdrawal Agreement.
Sterling jumped on the news - and kept hold of its gains – as investor’s fears about a no-deal Brexit begin to wane. GBPUSD traded up at 1.2830, and is now eyeing the 1.2920 – 1.2935 area, a level last seen 10-days ago. On the 15-minute chart GBPUSD looks overbought on the RSI indicator and may drift lower before consolidating.
GBPUSD 15 Minute Price Chart (December 3 - December 4, 2018)
On Mondays we take an in-depth look at important UK data releases, Brexit and other UK asset market drivers at 10:30GMT in our UK Key Events and Markets Webinar. and we will try and make sense of what is going on and how it will affect markets.
IG Client Sentiment data show 72.0% of traders are net-long GBPUSD, a bearish contrarian indicator. However, recent daily and weekly positional shifts give us a mixed trading bias.
Traders may be interested in two of our trading guides, especially in times of volatility – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.
--- Written by Nick Cawley, Analyst
To contact Nick, email him at email@example.com
Follow Nick on Twitter @nickcawley1
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.