After rejecting PM May’s Withdrawal Agreement and failing to agree on any alternative, UK MPs are again counting on May’s persuasive power to obtain another extension agreement. Yet the outcome might be very different from what May’s extension period considered, as both houses of Parliament ratified a legislation that provides lawmakers the chance to impose legally binding changes into May’s divorce date.
Indeed, as May’s government is willing to postpone the date by 30 June 2019, it is becoming clearer that UK Parliament is willing to impose a longer period, thus prompting another debate among MPs that is taking place today. The recent talks initiated between the Conservative and Labor party brought nothing but gridlocks since no resolutions included a scenario where the UK would remain within the EU customs union, a major requirement for Jeremy Corbyn’s Labor party while being the exact opposite of Tory’s Brexiteers.
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It is therefore very likely that the British pound gets a boost for the time being. Either scenario consisting of a short-term or a longer-term extension period would provide GBP bulls with good reasons to support the currency. However major risks remain since European leaders are again solicited for an emergency summit in Brussels on Wednesday and while a certain disinterest in Brexit emerges ahead of incoming EU election, the European Parliament is expecting to see a plan attached with the extension.
Currently trading at 1.3103, GBP/USD is heading along 1.3150 short-term.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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