Sterling fell on Thursday as investors awaited the European Union’s decision on whether to grant Britain an extension and for how long. Sterling was also effected by the potential risks posed by a possible general election in coming months. The pound has come back under pressure after surging to 5 month highs as British Lawmakers blocked Boris Johnson’s plan to push through a withdrawal agreement on 31st October. Johnson plans to hold a general election if an extension is given by the EU but many doubt there is sufficient support in Parliament for a pre-Brexit election.
Friday will see EU leaders set to decide whether to grant the UK a three month Brexit extension. Most EU nations are likely to back the decision to given an extension but France is not sure whether this would be a good idea. French President Macron believes a short sharp delay would encourage MPs and the UK government to push the deal through Parliament but sees a lengthy extension leading to more uncertainty and incisiveness. If the EU approves the UK’s request for a three month extension, Johnson would need to accept it under the terms of the Benn Act.
Lastly Boris Johnson said he will give MPs more time to debate the Brexit deal but only if they agree to a general election on 12th December. If Brexit is delayed till the end of November, the PM will try get his deal through Parliament again. However if the delay is till the end of January then Johnson will hold a Commons vote next week for a general election on 12th December.