Bullish investors are getting more confident as for the sterling pound growth amid the news that UK PM Theresa May may postpone the Brexit from March 29 to a later date.
The development will ease uncertainty around the issue as well as concerns that the UK may exit the EU without any agreement in March. Nevertheless, the delay brings the risk that the UK will end up in limbo. Although the pound may keep on increasing amid expectations of the delay, its mid- and long-term prospects are still dimmed. Given an increasing chance of a second referendum after the statements of the Labor Party leader Jeremy Corbin, the Brexit is still questionable at all.
A little more than a month remains before the Brexit, the pound is expected to be extremely volatile and sensitive to the reports on this issue. Market participants will take into account the inflation rate report that will be published later today. However, the meeting of the Cabinet regarding the Brexit deadline issue will definitely be more important.
The GBP to USD rate is increasing, reaching 1.3130 at the moment. Expectations of the Brexit delay and the US dollar weakness can result in a rise to 1.3200 in the short term.
Meanwhile, the US dollar has been slack lately. As the available data shows, the US Dollar index reached an important psychological level of 96 driven by different factors.
The recent pack of weak economic reports in the USA along with an anticipated pause in the interest rate revision to be made by the US Federal Reserve this year hardly supported the greenback's positions. Demand for protective assets slackened on increasing interest of investors in the risk. In this situation, the US dollar will remain depressed in the near term. Bulls can lose their source of support in the form of a difference between the economic situation in the USA and other countries.
Market insiders are mainly focused now on the Congress statements by US Federal Reserve Chairman Jerome Powell. Specifically, Powell will make the monetary policy clearer for this year. In fact, he once again notes that the Central Bank is ready to be patient in terms of the policy tightening. Some market experts say the greenback will slide against the majors.