The British pound crumbled yesterday after London requested another extension in the long-running Brexit saga, while global stocks were having a humdrum day enlivened only by hopes over China-US trade talks.
British Prime Minister Theresa May has asked the European Union to delay Britain’s departure until June 30, while the bloc itself suggested that it might be best to postpone the split for up to a year.
As so often before, sheer uncertainty over Britain’s future weighed on sterling, but the currency’s downside was limited by expectations that the exit from the EU will be softened by some kind of agreement with the bloc.
“As far as most currency traders are concerned the chances of a no-deal remain remote – but at the same time a satisfactory outcome anytime soon also seems highly unlikely,” said XTB analyst David Cheetham yesterday.
Ms May also told EU Council president Donald Tusk in a formal letter that Britain would start preparing for its participation in European Parliament elections in case it is still a member of the bloc when they begin on May 23.
The embattled premier is racing against the clock in a desperate bid to get her deal approved in time for an EU leaders’ summit in Brussels on Wednesday, when a formal decision on any extension will be made.
She is also holding a third day of delicate talks with Opposition Labour Party leader Jeremy Corbyn to find a way to avert a messy no-deal divorce.
The Brexit current deadline is April 12, which has already been pushed back once from March 29.
In stock market deals London gained as the pound weakened, while neither Paris and Frankfurt had much to show for the day's trading.
On Wall Street, the Dow Jones index rose after the government reported jobs numbers for March well above expectations, a sign of a robust economy that was greeted with much relief after weak numbers a month earlier.
“After disappointment in February, job creation bounced back nicely in March,” ING chief international economist James Knightley said.
Asian equity indices mostly rose in holiday-thinned trade on hopes that China and the United States will hammer out a trade deal after both sides sounded notes of optimism.
With top negotiators from the world’s top two economies huddled down in Washington for three days of talks, there has been a growing sense they are close to an agreement to end a stand-off that battered global equities last year.
US President Donald Trump added to the sense of hope earlier this week when he said the two sides were nearing a successful conclusion.
“We will probably know over the next four weeks. It may take two weeks after that,” he told reporters after a meeting with Beijing’s vice premier Liu He.
“It’s looking very good.”