Brexit delay request sends pound reeling

22 March, 2019 12:00 AM printer

LONDON: The pound fell sharply on Wednesday after Prime Minister Theresa May announced Britain was seeking a delay to its exit from the European Union until June 30, while investors awaited the US Federal Reserve’s interest rate call.

“The pound’s Wednesday only got worse after the confirmation that Theresa May is seeking a short delay from the EU, one that arguably does not give the government enough time to get through a sterling-positive Brexit deal,” Spreadex analyst Connor Campbell told AFP, reports AFP.

“It appears that, despite the various votes highlighting MPs unwilling to leave the EU without a deal, that kind of disastrous exit is still very much on the table.”

The pound lost about half a pence in the space of roughly 10 minutes after May announced the delay, falling to $1.3147, bringing its loss for the day to around one percent.

May had been widely expected to ask the bloc for an extension of the March 29 deadline for leaving, having seen her exit proposals twice rejected MPs.

The European Commission, for its part, warned EU leaders in an internal briefing note ahead of an summit in Brussels that delaying Brexit to June 30 would bring “serious legal and political risks”.

It urged a shorter postponement to before European Parliament elections in May, or a much longer one at least till the end of this year. European Council president Donald Tusk said later Wednesday that EU leaders could approve a short delay to Brexit if British lawmakers finally approve the withdrawal deal they have twice rejected.

Later Wednesday, the Federal Reserve’s March policy meeting concludes, with analysts predicting it will announce a slower pace of interest rate hikes as the world’s biggest economy shows signs of softening amid trade tensions.

Investors also eyed China-US trade talks, optimism about which have helped propel equities higher across the world this year — offsetting concerns about the outlook for the global economy.