Forex – Sterling Tanks on Brexit Legal AdviceFxPremiere.com – The British Pound reversed early gains on Tuesday, falling to the lowest levels of the day as legal advice on the Brexit indicated that the legal risk that the U.K. could be trapped.
GBP/USD was down 1.03% to 1.3014 by 07:30 AM ET (11:30 GMT), after rising as high as 1.3287 earlier in the day.
The advice came as lawmakers prepared to vote on a divorce deal later in the day.
European Commission head Jean-Claude Juncker agreed to additional assurances in an updated Brexit deal with British Prime Minister Theresa May on Monday.
GBP Sterling, which had risen ahead of the talks between May and Juncker, extended gains in hopes the changes may be enough to sway rebellious British lawmakers who have threatened to vote down May’s plan again on Tuesday. Dissenting MPs still haven’t said whether they’ll change their minds.
A lower likelihood of crashing out of the EU with no Brexit deal could help to inject some bullish sentiment into equity markets by eliminating one of the three major concerns of global investors, alongside trade and slowing global growth, said Greg McKenna, strategist at McKenna Macro.
“Take Brexit off the table and I think some of the real money flows that appear to have turned up late last week are likely to be there again. So I think it helps change the backdrop a little bit,” he said.
The euro, which has struggled recently due to dovish signals from the European Central Bank, found a measure of support against the dollar on the Brexit news.