EU Grants Three-Month Extension to Brexit Process

The EU has granted a three-month extension to the Brexit process, paving the way for a general election this side of Christmas. The European Council president Donald Tusk tweeted that the EU27 member states would ‘accept the UK’s request’ for Article 50 to be delayed until 31 January 2020.

The Prime Minister Boris Johnson has failed in his promise to have the UK out of the EU by Halloween – but avoids a no-deal Brexit. So, the UK now remains in a limbo period until an election is formally announced or the Withdrawal Bill is enacted.

The ‘flextension’ which has been granted means the UK could leave the EU before the 31st January deadline if a deal is agreed and ratified in time, although in practice this is not expected to occur as MPs should take the maximum time available to scrutinise any legislation. As a result, the FX rates have remained fairly flat since the market opened late on Sunday.

The Prime Minister will today seek an election for the fourth time in two months. Last night he was unable to convince MPs to back him in his attempt to secure a snap election, with Labour leader Jeremy Corbyn and others insisting they could not trust him not to push back the date and force a no-deal Brexit in the new year. With 299 votes in favour and 70 against, the majority of Labour MPs choose not to vote, as such the vote failed to meet the two-thirds threshold required under the Fixed Term Parliaments Act.

The Liberal Democrats had been in discussions with the government over an option they would back, along with the SNP, which would enshrine the date of an election in law – thus allaying such fears.

Johnson said: “There is no support in the house for the WAB to proceed, but this House cannot any longer keep this country hostage. Millions of families and businesses cannot plan for the future and I don’t believe this paralysis and this stagnation should be allowed to continue.”

A No 10 source added: ‘Tonight we are laying a one-clause motion to amend the FTPA and call an election with the named day of 12 December. The bill is very similar to the Lib Dem/SNP bill. The WAB will not be put back. This is the way to get Brexit done so the country can move on.’ All eyes will be on whether bill get passed this evening as we may then finally see a path to an election open up.

Key rates

GBPUSD – Trading min the mid 1.28’s at 1.2845

GBPEUR - Trading below 1.16 at 1.1590

EURUSD - Trading back below 1.11 at 1.1080

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