Sterling edged higher on Monday after the European Union granted the United Kingdom a three month ‘flextension’.
European Council President Donald Tusk took to his Twitter account to announce the news that the EU 27 have agreed to the UK’s request for an article 50 extension and that the decision is expected to be formalised through a written procedure. The ‘flextension’ will last for three months, until the 31st January 2020, and will allow the UK to leave the EU earlier if a Brexit deal can be ratified. Despite the odds of a no-deal Brexit falling sharply with the news, sterling’s reaction was limited as markets had already priced in the extension.
In the afternoon session, sterling was back under pressure as markets awaited a vote tabled by the PM to have a general election. The PM lost the vote to have a snap election for the third time as he failed to secure a two thirds majority.
The government are expected to back a Liberal Democrat plan on Tuesday to table a bill for a 12th December general election requiring a simple majority as opposed to Monday’s two-thirds majority.