U.K. Path to Remain Opening Up
The British Pound, which has been very weak lately, rose quite sharply during the early part of the London session, as news emerged that the European Court of Justice’s Advocate General believes it would be lawful for the United Kingdom to unilaterally revoke its invocation of Article 50. The European Court of Justice will issue a ruling on this matter soon, but the Court usually follows the opinion of its Advocate General. What this is likely to mean in plain English is that the United Kingdom is likely to be able to abandon its plan to leave the European Union on 29th March 2019 if its Parliament decides to overturn the result of the 2016 referendum, which the British Government at the time promised it would implement.
If the U.K. were to remain within the European Union, we could expect the British Pound to soar in value, quite possibly to about $1.40 at least. With betting shops in the U.K. now offering less than a 25% chance of the British Government getting its deal through Parliament, and the European Union reiterating the current deal is the only possible deal on offer, it looks increasingly likely that the choice will come down to “no deal” or “remain”. Either eventuality would have dramatically different impact upon the relative value of the British Pound. I’ve written before about how I think it is becoming likely that the British Parliament will steal the 2016 vote to leave the European Union if it feels it can get away with it. However, it may be that it would feel compelled to offer a second referendum rather than simply steal the vote outright, and a recent poll has shown that even after the biggest scare campaign in British history, “no deal” still has an approximately 50% chance of victory against remain at the ballot box.
The next few months will be interesting times for the British Pound and will likely offer opportunities to Forex traders.