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Pound yo-yos after Brexit vote delayed

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Theresa May speaks to the press during the first joint EU and Arab League summit at Sharm el-Sheikh in Egypt. Photo: AFP/Getty Images/Khlaed Desouki

The pound is volatile on Monday morning after UK prime minister Theresa May decided to delay a parliamentary vote on Brexit.

May was due to ask parliament to vote on her Brexit deal this week, but said over the weekend that she was unlikely to be able to reach a deal by then. As a result, the prime minister now plans to give the House of Commons a “meaningful vote” on her Brexit deal on 12 March. This would be just two and a half weeks before the official Brexit date.

This delay to the Brexit vote comes amid reports that the EU wants Brexit to be delayed until 2021 if parliament continues to reject May’s deals.

Opinion is divided on what all this means for the pound and, by extension, the UK economy.

Paul Donovan, chief economist at UBS Wealth Management, said in an email on Monday: “Some EU leaders are suggesting a delayed exit should target 2021 — economists despair at the thought of another two years of talking about this. The economy would do better with certainty.”

Josh Hardie, CBI deputy director-general, likewise said in response to the delay to the Brexit vote: “This is the latest signal to businesses that no deal is hurtling closer. It must be averted. Every day without a deal means less investment and fewer jobs created. That’s the cost of running down the clock, and it’s irresponsible to treat that as a price worth paying.”

However, John Ricciardi, CEO of Kestrel Investment Partners, told CNBC that the pound could benefit from May delaying the Brexit vote as it would likely mean either a delay to Brexit or May’s deal being passed.

John Fahey, a senior economist at Allied Irish Bank, similarly said: “For sterling, any amendments passed that enhance the control of parliament over the Brexit process, while at the same time reducing the risk of a no-deal hard Brexit is likely to be viewed positively by sterling watchers.

As a result, the pound was volatile on Monday morning against both the dollar and the euro, swinging between being slightly lower and slightly higher against both.

At just after 9:35 AM, sterling was up 0.1% against the euro to €1.15. At the same time, the pound was up 0.2% against the dollar.

Volatile: The pound against the euro on Monday morning. Photo: Yahoo Finance UK

Larry Fink, the CEO of Blackrock, said on Monday that Brexit is “annoying” the private sector due to the “irresponsibility” of the UK government in failing to reach a deal.

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Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.

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