More Brexit drama as European Union offers extension, with catch

Alan Penny

20 March 2019

3 min read

The latest spin on Brexit suggests that perhaps the European Union is willing to extend the article 50 move, so having said that it’s likely that we will get even more volatility when it comes to the Euro and more importantly the British pound.

The offer

Theresa May has sent a letter to the European Union, requesting a delay of the article 50. She suggested that she was confident that she can push the deal through Parliament, which of course is a bit of a laugh as MPs have voted her down twice before. Beyond that, hardliners continue to suggest that having a “no deal Brexit” is better than the offer that the European Union put on the table. With this, it’s a bit hard to see how we go forward for any length of time, but on the other side of the English Channel the European Union isn’t exactly strong either. At this point, the question is whether or not the European Union can afford to lose the United Kingdom after all? The reality is that it probably can’t.

There have been plenty of speculative comments on both sides of the equation, suggesting that perhaps the situation isn’t getting any more clear at this point.

Theresa May

Theresa May

Rumors abound

Looking at the overall picture, it’s obvious that we still have a lot of concerns out there. One of the ones that is starting to pick up steam is that Theresa May could possibly be forced to resign, as she simply can’t get the job done. This of course could throw the currency markets into disarray, as we still don’t understand where we are going next.

Another rumor is that Teresa May is going to have a press conference in front of Number 10 Downing on Wednesday night, perhaps in yet another attempt to save the deal. One thing is for sure, as we continue to go forward, it’s very likely that the odds of a “no deal Brexit” are increasing.

Reaction to the request for an extension

It appears that there has been a mix of frustration and anger due to her extension request, both from bureaucrats in Brussels and opposition MPs in the British Parliament. The biggest complaint is that the PM is refusing to adjust the plan or be flexible at all. After all, her plan has failed twice, and it’s very likely that it will only fail again. At this point, most people on the opposition suggest that this is only making a bad situation worse.

Beyond that, the French Foreign Minister has already stated that the extension will only be granted if Theresa May can get the plan through Parliament. Essentially, the European Union is playing hardball, but at the end they have just as much to lose as the United Kingdom does.

Continued volatility

At this point, it’s obvious that we will continue to see volatility in the British pound and perhaps even the FTSE 100, as we have seen so much in the way of uncertainty which is simply not going away. As the situation has crossed the 1000th day since the referendum, anything with United Kingdom attached to it will continue to be noisy to say the least. It appears that we are nowhere near a resolution still.

Written By
Alan Penny

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