The EU Summit: Can the Pound Move on from Brexit?The Pound and Brexit now sits in the hands of EU member states. One vote against an extension and expect the Pound to tumble.
British Prime Minister Theresa May will be arriving in Brussels for the EU Summit today and things haven’t quite gone according to plan.
With the Brexit blueprint in tatters and British politics in a state of chaos, Theresa May has been left without a parliamentary backed Brexit deal.
All of this after more than 2-years having passed since the EU Referendum. 2-years should have been more than adequate time to iron out any indifference. The British government couldn’t have been further from the truth.
The Establishment dug its heels in and voila…
Even a tumbling Dollar couldn’t save the Pound on Wednesday. A 0.53% slide came off the back of reports of Donald Tusk stating that a short extension would only be permitted if parliament votes in favor of a deal. While the markets bulked at such a stance by the EU, the reality is that Theresa May is perhaps being a little over optimistic on requesting for a 3-month extension.
It’s not quite checkmate for Parliament. The EU could push the British PM into taking a lengthier extension. At least a year. The alternative would be a third parliamentary vote that could go the same way as the previous two and leave Britain without a deal.
Things could get precarious later today should EU member states fail to support any kind of extension. Parliament has already voted against a no-deal departure from the EU.
If the EU decides to deny an extension request and Parliament fails to agree on “the deal” by 29th March that would leave one last option. A 2nd Referendum.
This time around, the Referendum would likely have the terms of the deal embedded. It may also need to be a legally binding one.
There would be no need for further negotiations and it would be a simple case of leave or remain. Far simpler than the 2016 Referendum, at least…
All eyes will be on Brussels. Can the Pound hold on?
It only takes one member state to go against the grain. That really would be lights out for the Pound.
Even today’s Bank of England monetary policy decision will likely take a back seat to May’s visit to Brussels.
At the time of writing, the Pound was down by 0.03% to $1.31882. A choppy start to the day saw the Pound bounce to a morning high $1.3227 before pulling back.