FxPro: GBP pulled out of the range on the Brexit postponing rumors

The pound jumped on the news that May intends to offer the cabinet to consider Brexit postponing if there is no deal with the EU. Markets always positively respond to news aligned with possible delays. As a result, GBPUSD rose to 1.3237, which was the highest level since October last year. The growth impulse caused a short-term strengthening against the euro to its highest level since May 2017, and the EURGBP pair at some point fell below 0.8600.

It will be too early to say that the British currency has turned to growth, because in the future we’ll have key votes with the support (or another failure) of the agreement plan with the EU, despite the fact that the economy is already feeling the uncertainty, showing a slowdown in economic indicators.

The pound may continue to rise if the cabinet approves the Brexit date postponement. This will somewhat reduce tensions around the approaching deadline (very similar to the situation with the US-China trade negotiations), but it is unlikely to become a fundamental basis for the British currency steady growth, since it does not solve problems, but will only give lawmakers time for further collisions, while uncertainty will gradually undermine economic growth.

Alexander Kuptsikevich, the FxPro analyst