Theresa May will request another Article 50 extension beyond 12th April.
But no later than 22nd May to avoid EU elections. Her main motivation is plans for fresh talks with Labour’s Jeremy Corbyn. Since Labour wants continued close EU ties, a softer Brexit could be on the cards. Still, conditions will include agreeing to May’s current Withdrawal Agreement. If talks fail, “a number of options” would be put to a vote. “Crucially, the government stands ready to abide by the decision of the house", May pledged, her strongest sign of compromise yet. She now faces stepped-up ire from the more than half of Tory MPs who voted against her deal last week.
Sterling reacted by retaking much of the loss that followed Monday’s failed indicative votes, but the pound’s 120-pip sprint stopped short of the week’s $1.3150 high. Insistence on the WA could yet stymie a clear breakthrough. ‘No deal’ is still ruled-in. The EU could fail to approve an extension, though this looks unlikely, but it might condition approval on a long delay. Yet perhaps once-bitten-twice-shy traders are overlooking how far the Prime Minister’s compromising spirit now extends. “We can and must find the compromises that will deliver what the British people voted for", she said.
GBP/USD vaulted past its 100-hour moving average, the key 61.8% Fibonacci marker and above 78.6% of Monday’s fall too. Admittedly, sterling may now require a trend change to rise further. Note the declining 100-hour MA. Yet bullish Fib extension and elevated stochastic oscillator at worst point to a failed move back to the week’s $1.3150 peak. Even then, there are hints of eventual success.
Sterling/U.S. dollar – hourly
Source: Tradingview/City Index
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