Brexit extension expected, but not yet confirmed, ahead of election vote

GBP/USD has benefited from the news that the EU is ready to allow a three-month Brexit extension to the UK. A leaked document suggested that the European Union EU is preparing to sign a deal that will offer a three-month Brexit extension, to January 31, 2020, with an option for the United Kingdom UK to leave earlier if a deal is ratified. As a result we have seen the pair move back above 1.28.

A December General Election became more likely this morning, after the government hinted it could use a similar plan to one proposed by the Lib Dems to enshrine an election in law, should its efforts to call a poll via conventional means fail tomorrow. “If Labour oppose being held to account by the people yet again, then we will look at all options to get Brexit done including ideas similar to those proposed by other opposition parties,” they said.

The government reiterated this point by saying, “we can’t allow parliament to waste 2020 the way it has wasted 2019 – the country wants Brexit done so we can move on and focus on the public’s priorities.”

Today the government will put forward a motion calling for a 12 December General Election which needs two-thirds of MPs to back it and seems poised to fail again, with Labour saying it will only support an election once a no-deal Brexit is off the table. It is very unlikely that Boris Johnson will take no deal off the table as he has repeatedly stated that it is a bargaining tool. Moving forward the market will continue to look at developments in parliament to see whether a General Election is possible before the end of the year, recent polls have suggested that the Conservatives are 12 points ahead of Labour. Sterling has remained well bid despite a deal not being agreed and this may be down to progress being made.

Key rates

GBPUSD – Trading above the 1.28 level at 1.2840

GBPEUR - Trading just below 1.16 at 1.1576

EURUSD - Below 1.11 again at 1.1092

The figures are based on the live mid-market rate, correct as of 09:15 GMT on 28/10/2019, and are provided for indicative purposes only. Live mid-market rates are not available to consumers and are for informational purposes only. The rates we quote for money transfer can be selected via the page on our website ‘Live Money Transfer rates’.

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