US President-elect Donald Trump promised such a move during his campaign.
Mohammed Ishtayeh, an adviser to Palestinian President Mahmoud Abbas, said today that the Palestinians were told by "American circles and diplomatic friends" that Trump might reaffirm the plan during his January 20 inaugural speech.
Ishtayeh says an embassy move would mean "the end of the two-state solution" to the conflict and would violate a global consensus.
Most countries, including the US, maintain embassies in Israel's Tel Aviv.