EUR/GBP rebounds above 0.86 on concerns over MPs not backing May’s Brexit deal

• Attorney General Cox’s legal advice puts PM May’s deal in jeopardy.
• US Dollar Index recovers above 97.20.
• Upbeat data from the UK failed to help GBP ahead of the meaningful vote.

The EUR/GBP pair, which lost nearly 150 pips on Monday after British Prime Minister said that she secured legally binding changes to the Irish backstop following a last-minute meeting with the European Commission President Juncker, recovered almost all of yesterday’s losses with Attorney General Cox noting that the legal risk remained unchanged  that UK would have no lawful means of exiting the arrangement in the PM’s renegotiated deal. As of writing, the pair was up 0.9% on a daily basis at 0.8625.

“However, the legal risk remains unchanged that if through no such demonstrable failure of either party, but simply because of intractable differences, that situation does arise, the United Kingdom would have, at least while the fundamental circumstances remained the same, no internationally lawful means of exiting the Protocol’s arrangements, save by agreement,” AG Cox said in a written statement.

Meanwhile, earlier in the day, the data published by the UK’s Office for National Statistics showed that the industrial production rose by 0.6% in January following December’s 0.5% contraction and the GBP expanded by 0.5% on a monthly basis in January to beat the market expectation of 0.2%. Nevertheless, the data failed to help the British pound and investors are now waiting for the critical meaningful vote on PM May’s tweaked Brexit deal, which is expected to take place at 19 GMT.

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