Did you guys see the Cable pop 100 pips higher just a while ago? The move was strong and unexpected, at least for a few minutes. It is still pushing higher up while my chubby fingers type as I speak.
So what was it?
I´m shocked; it's Brexit again. Well not really, obviously it was going to be something related to Brexit. I just didn´t know what it was exactly. It had slipped out of my mind that today was the date of the UK High Court decision regarding Brexit and Article 50, which is the final step of leaving the EU.
It was not hard to guess, putting it in a few words, that the UK High Court ruled against Brexit. In fact, it ruled against triggering Article 50, but that´s the same as ruling against Brexit because you can´t get out of the EU if you don't file this form and send it to the EU headquarters in Brussels.
Looking at the High Court comments, they are saying that presentation to the court of this matter is a law issue so it is justifiable, meaning that the UK High Court has the right to decide on Brexit. The comments say that “treaties such as the EU where UK is still a member are a prerogative matter” and “the UK government doesn´t have the prerogative power to give notice”.
Putting it in simple words, the UK High Court is saying to the UK government, and particularly the Brexit camp, that treaties such as the EU are a law now for every member country and the British government doesn´t have the right to change the legislation. It seems to me that Brexit will go through the parliament and not only for discussion.
This comes about a week after the Northern Ireland High Court ruled against a similar claim. However, that case was whether North Ireland could reverse Brexit since it voted against it. It´s not over yet though; the appeal date for the UK government is set for early December.
The jump is considerable, but it´s too soon to call a reverse
GBP/USD is getting close to the 1.25 level, which we pointed out in our post yesterday where we conducted a technical analysis for this forex pair. We said that 1.25-26 would be a good area to open a long term sell forex signal in this forex pair, but that was yesterday. Today the fundamental outlook has changed and if the appeal goes against the UK government, then we might see the GBP pairs shoot hundreds of pips higher, if not thousands