Sterling Surges To A Five Month High

GBP

Sterling surged to a five-month high against the dollar on Tuesday as investors ramped up bets that a no-deal Brexit could be avoided after Prime Minister Theresa May offered MPs the chance to vote on delaying the process.

Prime Minister Theresa May on Tuesday offered members of parliament the chance to vote in two weeks for a potentially disorderly no-deal Brexit or to delay Britain’s exit from the European Union if her attempt to ratify a divorce agreement fails. Opening up the possibility of a delay and removing the immediate threat of a no-deal exit on March 29 marks one of the biggest turning points in the United Kingdom’s labyrinthine Brexit crisis since the 2016 referendum vote to leave the EU.

In a move which pushes back the Brexit cliff edge by three months to the end of June, May announced she was to give the MPs two votes on March 13-14 if she failed to get a deal approved by March 12. The government would allow a vote on March 13 at the latest asking whether MPs supported leaving without a deal. If they rejected such an option, on March 14 they would vote on a “short, limited extension” Brexit delay.

The EU would be ready to approve a short Brexit delay if Britain need more time to ensure parliamentary ratification of their divorce agreement, three EU officials said. After parliament voted 432-202 against her divorce deal in January, May is trying to negotiate changes to the exit deal she agreed with the EU last year and had promised to bring it back for approval in parliament by March 12 at the latest.

USD

The dollar gained against most currencies on Tuesday, boosted by strong U.S. consumer confidence data and comments on the economy from Federal Reserve Chairman Jerome Powell that were in line with market expectations. In prepared testimony released in advance of a hearing before the U.S. Senate Banking Committee, Powell said the Fed will remain “patient” in deciding on further interest rate hikes, reaffirming the policy shift made by the U.S. central bank in January. This the first of Powell’s two-day appearance before the U.S. Congress.

Key Announcements

15:00 - USD: Fed Chair Powell Testifies