Sterling began to drop off against major currencies yesterday after Theresa May was granted an extension to Britain leaving the European Union, taking the deadline to October 31, 2019. Today the pound is trading lower at €1.1568 versus the euro and $1.3056 against the US dollar at 8.56am UK time. Analysts suggest delaying Brexit is creating prolonged uncertainty for Sterling. Connor Campbell, analyst at Spreadex, said: “Sterling continued to show no signs of relief that Brexit has been delayed, the currency now requiring more from the Government than mere postponement.
“Against the dollar it was flat, the wrong side of $1.306, having fallen late on Thursday.
“Against the euro, meanwhile, it shed 0.3 percent, forcing it under €1.567 and to its worst price in 3 weeks.”
Mrs May had originally asked EU member state heads to push Brexit back until June 30, 2019, after reports suggested Brussels would delay Britain’s exit for a year.
It is understood that the UK would be able to leave earlier if Parliament comes to an arrangement on the withdrawal agreement.
Meanwhile, latest Brexit developments will see ministers hold further talks with Labour in an attempt to break the Brexit deadlock.
Leading the talks has been Mrs May’s de facto deputy, David Lidington, and shadow Brexit secretary Sir Keir Starmer.
Details of Fridays’ meeting were still being finalised.
Downing Street is still hoping they can get a deal through Parliament in time to avoid the need for Britain to vote in elections to the European Parliament.
The elections are set to take place in just a few weeks’ time on May 23.
Ian Strafford-Taylor, CEO of currency expert at FairFX, said the pound is likely to remain “vulnerable to volatility” off the back of the continued uncertainty around the terms of Brexit.
He said: “The second extension to Article 50 means we have avoided crashing out with a no-deal Brexit which could have been very damaging for the pound.
“However, the pound has been on a rollercoaster journey against the euro since the referendum back in 2016.
“The continued uncertainty that comes with this extension means the pound is still very much vulnerable to volatility.”