EU to decide on Brexit extension next week - Sources
|- Brexit extension and general election up in the air.
- GBP/USD implied volatility on the rise, traders looking for a break out one way or the other.
The EU is unlikely to decide on the Brexit extension tomorrow and will likely decide on Monday or possibly Tuesday instead, as they are waiting for more clarity from the UK, according to sources.
The EU’s plan to offer the UK an extension until 31 January on Friday is now expected to be put on hold after Boris Johnson threatened to pull the deal off the table should Jeremy Corbyn reject a general election.
Earlier in the day, it appeared that a three-month extension was a given, whereby the EU would allow the UK to cut it short should the Brexit deal be ratified –The final offer could differ from the Benn act by specifying that the UK could leave on 15 November.
FX implications:
Traders are cautious with the pound considering the volatility and momentum behind moves one way or the other and thinner liquidity only makes for more volatility. Options markets are giving implied volatility of around 12% in the Pound and traders are looking for a break out that could go either way at this stage.
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