Pound steady as EU leaders ponder Brexit extension request

Edmund Heaphy
·Finance and news reporter
Britain's Prime Minister Boris Johnson gestures as he speaks in the House of Commons in London during the debate for the EU Withdrawal Agreement Bill, Tuesday Oct. 22, 2019. British lawmakers have rejected the government’s fast-track attempt to pass its Brexit bill within days, demanding more time to scrutinize the complex legislation and throwing Prime Minister Boris Johnson’s exit timetable into chaos. (Jessica Taylor, UK Parliament via AP)
Prime minister Boris Johnson speaking in the House of Commons on Tuesday. Photo: Jessica Taylor, UK Parliament via AP

The pound was steady on Wednesday after MPs voted against prime minister Boris Johnson’s plan to force his Brexit deal through parliament.

European Council president Donald Tusk said he would recommend that EU leaders accept the extension request that Johnson reluctantly sent earlier in the week.

The currency, which declined sharply on Tuesday after a series of votes in parliament on the deal, hovered around the $1.28 mark on Wednesday (GBPUSD=X).

A spokesperson for the European Commission indicated that leaders would consider an extension until 31 January.

Amid optimism about the prospect of Johnson getting the deal through parliament, the currency had briefly touched $1.30 for the first time since May on Monday.

The pound firmed up on Wednesday morning after sharp losses on Tuesday. Chart: Yahoo Finance
The pound firmed up on Wednesday morning after sharp losses on Tuesday. Chart: Yahoo Finance

“The pound dropped sharply after the latest Westminster drama but is firming up this morning,” said Neil Wilson, chief market analyst at Markets.com.

“The pound remains the proxy for the Brexit process and it’s displaying nervousness that parliament still can’t get its act together and see a deal through. Uncertainty prevails for the time being, but parliament has backed a deal and that feels like a key moment.”

Though Johnson had threatened that he would pull the Withdrawal Bill from parliament, he instead decided to pause the legislative process.

MPs voted to support the bill — the first time that parliament has backed a Brexit deal — but against Johnson’s whirlwind three-day schedule. The bill could now be opened up to weeks of parliamentary scrutiny.

“Taking time out, the government chose to pause the bill — but did not abandon it altogether. Importantly, Boris Johnson said that the UK would leave the EU with this deal come what may, but did not stick to his 31 October do-or-die mantra.”