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Pound hovers amid reports Boris Johnson will ask EU for Brexit extension

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Britain's Prime Minister Boris Johnson leaves Downing Street in London, Britain, October 3, 2019. Photo: REUTERS/Henry Nicholls

A report that Boris Johnson will obey a law compelling him to ask for a Brexit extension failed to support the pound on Friday.

Sky News reported on Friday lunchtime that new government documents suggest the Prime Minister will write to the EU asking for a Brexit extension if no deal is reached by 19 October, obeying a law passed by parliament last month compelling him to do so. There has been constant speculation that Johnson would ignore this law since it was passed and the Prime Minister has continued to insist that Britain will leave the EU with or without a deal on 31 October.

The document promising an extension, which was published as part of a Scottish legal case, did little to revive the pound. Sterling was down 0.1% to €1.1232 against the euro (GBPEUR=X) shortly after the report. The pound was flat against the dollar at $1.2334 (GBPUSD=X).

The government document promising an extension if no deal is reached was made public as part of a Scottish legal case considering whether the Prime Minister can be jailed if he fails to comply with the law requiring an extension.

Johnson said shortly before the bill was passed in early September that he would rather be “dead in a ditch” than ask the EU for another Brexit extension and has referred to the binding act of parliament as the “Surrender Bill,” a phrase that has drawn widespread criticism.

The Prime Minister this week presented his proposals for a Brexit deal to the EU. The 27 member bloc said the proposals represented progress but needed more work. If the two sides cannot reach a compromise within two weeks, Johnson will be forced to ask for an extension.