Pound fell sharply, nearly 1%, on Wednesday after May requested the EU a short Brexit extension until June 30. The extension was shorter than traders expected.
May said she wanted an orderly departure from the EU and planned to bring her twice-defeated divorce deal back to the British parliament. However, May also warned that delaying Brexit by extending negotiations did not rule out the possibility that Britain could leave the EU without a deal.
With no consensus in Britain’s parliament over how to leave the EU, May was forced to seek an extension from the EU beyond the scheduled departure date of March 29.
The extension, which will need approval from EU member states, leaves the Brexit divorce uncertain. Options include leaving with May’s deal, a longer delay, a disruptive exit or even another referendum.
Markets have largely priced out the chances of a no-deal Brexit but uncertainty about how and when Britain will leave the EU have kept sterling traders on edge.
The pound dropped to as low as $1.3147, down nearly 1% on the day. It had been trading around $1.3220 before May addressed parliament, having rallied to a 9-month high last week.
Against the euro, sterling fell 1% to 86.39 pence, the lowest since March 12.
Various gauges of market volatility in the pound remained firm, even as other gauges, such as one-month euro volatility indexes, ticked lower.
START TRADINGForex – Pound nearly 1% down on Brexit delay request
The dollar was little changed against a basket of major currencies on Wednesday. Traders were cautious ahead of a Fed monetary policy decision expected to offer clues on the direction of U.S. interest rates. The dollar surged against sterling amid investor wariness over the prospects for the British currency.
The dollar index rose 0.04% to 96.422. Most currencies remained within slim trading ranges before the Fed decision.
Oil prices fell on Wednesday, dragged down by concerns about global economic growth as the U.S.-China trade dispute rumbled on, but receiving some support from tightened supply.
International Brent crude oil futures were at $67.35 a barrel at 1250 GMT, down 26 cents, or 0.3%. U.S. West Texas Intermediate (WTI) crude futures were at $58.43 per barrel, down 60 cents, or 1.02%.
Sources: Reuters, Investing, CNN money
PLEASE NOTE The information above is not investment advice.