The Prime Minister last night secured a medium-length delay to Brexit, with the new departure date being set for October 31, 2019. Mrs May had originally asked the European Union to push Brexit back until June 30, 2019, after reports suggested Brussels would delay Britain’s exit for a year. The Conservative leader acknowledged the “huge frustration” over Brexit being postponed, with currency analysts fearing the longer wait will spark renewed uncertainty. As of 9.50am UK time, the pound is muted at €1.1593 against the euro and $1.3072 versus the US dollar.
At 12.00pm, the pound’s performance had not improved much and was trading at €1.1608 and $1.3095.
Kit Juckes, currency analyst at Societe Generale, said: “It isn’t brilliant for the economy, to add uncertainty on top of uncertainty.
“But more time to prepare for leaving will help, and recent data haven’t really given all that much support to the idea that pre-departure uncertainty is hurting the economy.”
However, Mr Juckes said the removal of a near-term no deal Brexit would be beneficial for the currency.
Thu Lan Nguyen, FX strategist at Commerzbank in Frankfurt, said: “People have been focused on Brexit.
“In the short-term, maybe these investors or traders will look more at the economic fundamentals.”
The outcome from the Brexit delay yesterday rules out a no-deal happening on Friday, less than 48 hours before the scheduled date for the UK’s withdrawal.
European Council President Donald Tusk said that the “flexible extension” would provide “an additional six months for the UK to find the best possible solution”.
It is understood that the UK would be able to leave earlier if Parliament comes to an arrangement on the withdrawal agreement.
A document of the conclusions from the European Council after their special meeting to discuss Article 50 said: “The European Council underlines that the extension cannot be allowed to undermine the regular functioning of the Union and its institutions.
“If the UK is still a Member of the EU on 23-26 May 2019 and if it has not ratified the Withdrawal Agreement by 22 May 2019, it must hold the elections to the European Parliament in accordance with Union law.
“If the United Kingdom fails to live up to this obligation, the withdrawal will take place on 1 June 2019.”
A review of the Brexit progress is set to take place in June.