"Next Year in Jerusalem and Merry Christmas to all of you".
Guatemala and Israel have long had close ties, especially in security matters and Israeli arms sales to Guatemala.
Tension has mounted in the Palestinian territories since December 6, when U.S. President Donald Trump recognized Jerusalem as Israel's capital, drawing protest and condemnation from across the Arab and Muslim world.
After speaking with Israeli Prime Minister Benjamin Netanyahu, Morales announced on his Facebook account that one of the most important topics they discussed was the "return of Guatemala's embassy to Jerusalem" from its current location in Tel Aviv. "So I inform you that I have instructed the chancellor to initiate the respective coordination so that it may happen".
In July, Morales decorated the outgoing Israeli ambassador Moshe Bachar with the Order of Quetzal on the Grand Cross degree, the country's highest honor, in recognition of his cooperation in strengthening the political dialogue between the Central American nation and the Jewish state.
Israeli Prime Minister Benjamin Netanyahu on Monday hailed the decision, saying other nations would also follow Washington's controversial lead.More news: The 'Ocean's 8' Trailer Is Extremely Fashion
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Guatemala is home to about 1,000 Jews in a population of 15 million.
Trump didn't set any timetable for moving the U.S. Embassy from Tel Aviv to Jerusalem, and neither did Guatemalan President Jimmy Morales.
The United Nations General Assembly has overwhelmingly rejected the Trump administration's decision to recognize the disputed city of Jerusalem as Israel's capital. The 128-9 vote was a victory for Palestinians, but fell short of the total they had predicted.
Several significant United States allies abstained from the UN vote, among them Australia, Canada, Mexico and Poland.
The Trump administration says recognizing Jerusalem as the Israeli capital is a "reflection of reality" and that the physical location of the embassy has no bearing on the US commitment to a two-state solution in the Middle East.
In all, 128 nations voted to maintain the worldwide consensus that Jerusalem's status can only be decided through peace negotiations between Israelis and Palestinians. The holy city has been at the centre of peace-making efforts for decades.