GBP price, news and analysis:
- The likelihood of a postponement of the March 29 deadline for the UK to leave the EU has risen considerably.
- That could mean that the GBP price continues to strengthen.
GBP price could rise further
The chances of the UK postponing the March 29 deadline for it to leave the EU have risen considerably after UK Prime Minister Theresa May’s withdrawal plan was rejected overwhelmingly in the UK Parliament Tuesday. Moreover, a vote of no confidence in her government later Wednesday looks set to be defeated – leaving her as Prime Minister but with very limited options.
A postponement of the March 29 deadline would likely be positive for GBPUSD, which has risen gently since the start of this month.
GBPUSD Price Chart, Daily Timeframe (September 5, 2018 – January 16, 2019)
Chart by IG (You can click on it for a larger image)
Other possibilities remain so there will likely be plenty of noise for GBP traders to turn a deaf ear to but another potential development could also be positive for Sterling: May reaching out to Opposition parties and potentially ending up in some kind of customs union with the EU, as proposed by the main opposition Labour Party.
On the downside, there is also a chance that UK lawmakers will fail to agree on even an amended version of May’s plan as her last attempts to rescue it fail. However, for now, she will likely press ahead and the GBP price should benefit as the chances of a no-deal Brexit decrease. The chances of a second referendum on EU membership also remain high - and any signs that the British have changed their minds and want to stay in the bloc would likely give GBP a boost too.
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--- Written by Martin Essex, Analyst and Editor