PM hopeful of another short extension
I’m not sure what the public fear more, an potentially indefinite backstop or indefinite negotiations. Theresa May requested another short extension from the EU on Friday to get a Brexit agreement through Parliament, as she continued to engage in talks with the opposition Labour Party.
It seems there are differences though between what May deems to be an acceptable extension and what Tusk believes it to be, which is much longer, albeit flexible. This will likely be discussed at the emergency EU summit next Wednesday, with the default remaining that the UK leaves without a deal on 12th April, one week from today.
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For now, that means more uncertainty for sterling traders. That said, barring a shock u-turn from the Prime Minister, her government and Parliament, no-deal remains unlikely.
That’s why we remain range-bound, no closer to exit day – in fact we’re probably further away, we just don’t know how far, which means prolonged economic uncertainty and sluggish growth but also the potential of a softer Brexit or remain.
This creates volatile but range-bound conditions for the pound, in this case between 1.30 and 1.33. We are near the bottom of that range now and have made a series of lower highs since the middle of last month, but I struggle to become bearish on the back of this. Only a breakout can achieve that. And we’re not exactly seeing momentum build heavily as we approach support.
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