Fun and games as GBP reacts to rumours of Article 50 extension
GBP has rallied on reports that the government has considered delaying Brexit, which in effect would mean that Article 50 would have to be extended. This has since been ruled out by a PM May spokesman, as the party line is maintained in that the UK will leave Europe on the 29th of March.
The initial reaction to the news was strong, with Cable leading the way and rallying through 1.2800 and taking out a range of stops through 1.2815 in the process. On the denial, the Pound has since pulled right back and we are back once again trading on the pivotal 1.2770 area, having held 1.2700-20 support firmly in the earlier sell-off.
As we saw with the data, the economy is holding up in the face of ongoing uncertainty, but there is only one thing on traders minds and that is the prospect of leaving the EU without a deal and the latest reactions have confirmed what is at the forefront of market sentiment here.
EUR/GBP naturally pushed lower to record a snap low at 0.8980 but has since recovered back above 0.9000 albeit tentatively so.
The rest of the crosses are also notably higher, with GBP/CAD and GBP/AUD still new higher on the day despite the respective (AUD and CAD) spot rates showing new highs on the week. Look for more volatility ahead as the Brexit saga is quickly coming to a head and this weekend is likely to be littered with news and opinion ahead of the meaningful vote on Tuesday.