May secures modest A50 extention

Sterling continued to behave like an emerging market currency last week

Concerns over a ‘no deal’ Brexit sent the currency crashing on Thursday, although it did recover towards the end of the week after the EU granted to the UK a modest extension to Brexit.

The UK is now set to leave the EU on 22nd May, providing Theresa May forces her withdrawal agreement through a parliament vote. Should her deal again be rejected, the EU exit date will be pushed until 12th April and the government would need to request a longer delay or risk crashing out without a deal. In this event, we think we could well see the Pound head well below the 1.30 mark, as investors brace for the possibility that the UK leaves the EU in a little over two weeks time without a deal in place.

We do, however, still think that either an extended delay to the Brexit process or a negotiated deal are the most likely outcomes, which should keep the Pound trading above the 1.30 level.

GBP/PLN (18/03/19 - 25/03/19)

Source: Thomson Reuters Datastream Date: 25/03/19

Author: Enrique Diaz-Alvarez, Chief Risk Officer at Ebury

Keywords Ebury