GBP/USD climbs to fresh 5-week highs, remains under 1.2500

The pound gained momentum during the American session and climbed, reaching fresh highs against the US dollar and the euro. GBP/USD reached 1.2492, hitting the strongest level since December 19. Then pulled back to 1.2465. 

It was trading at 1.2475/80, up more than a hundred pips for the day and headed toward the third daily gain in a row. 

If the pair consolidates around current levels it would be the highest daily close in a month and above the relevant support area located at 1.2420/30, that capped the upside, several times during January. At close at current level could open the doors for and extension of the recovery. 

Looking at UK Supreme Court ruling

Tomorrow the UK Supreme Court will announce its decision, if the government needs to have a Parliamentary vote or not, to trigger the Article 50 (beginning of Brexit). 

“After Prime Minister May's speech last week, the decision may have lost some of its ability to roil the markets. May reassured that Parliament would vote on the final agreement”, said analysts from Brown Brothers Harriman.

According to them, there is little doubt a majority will vote to trigger Article 50 in the Parliament but they warn that a failure to do so, would likely spark a political crisis. “Northern Ireland will go to the polls on March 2. An anti-Brexit parliament could still frustrate May's timetable, and Scotland independence efforts may be fanned by the UK government's position.” 

Article 50 decision and the pound: It’s all about the Sewel Convention