The value of the pound rose against the US dollar after the United Kingdom and the European Union agreed to delay Brexit until the 31st of October 2019.
Sterling climbed against the dollar to pop above $1.31 after the probability of a no-deal Brexit — which would have been the default result of the United Kingdom leaving the European Union on the 12th of April if an extension was turned down by the bloc — was temporarily quashed.
Late last Wednesday night, the United Kingdom and the European Union agreed to a “flexible extension” of Brexit until the 31st of October this year, after five hours of negotiations at an emergency EU summit that was in Brussels. Previously, Theresa May, the British Prime Minister, had been requesting for a delay until the 30th of June, while Donald Tusk, the European Council president, had repeatedly asserted that the option for a year-long extension was on the table.
The extension to Article 50 — the mechanism that notifies when the United Kingdom will leave the European Union — does not mean that the negotiations will reopen between the bloc and the United Kingdom. It only means that it will give PM May more time to try and pass her withdrawal agreement in the British parliament. She has attempted that four times before and it has been rejected each time by the members in and out of her party.
PM May confirmed that “if we are able to pass a deal in the first three weeks of May, we will not have to take part in European elections and will officially leave the EU on Saturday, 1 June.”
Tusk said that his “message to British friends” was “please do not waste this time.” Leo Varadkar, the Irish Taoiseach (prime minister), also warned that the United Kingdom must now hold European elections in May, or leave on the 1st of June without a deal.
In a statement, following the agreement with the bloc, PM May stated: “I continue to believe we need to leave the EU, with a deal, as soon as possible.”
She added: “And vitally, the EU have agreed that the extension can be terminated when the Withdrawal Agreement has been ratified — which was my key request of my fellow leaders.”
She continued: “I know that there is huge frustration from many people that I had to request this extension. The UK should have left the EU by now and I sincerely regret the fact that I have not yet been able to persuade parliament to approve a deal which would allow the UK to leave in a smooth and orderly way.”
She noted: “But the choices we now face are stark and the timetable is clear. So we must now press on at pace with our efforts to reach a consensus on a deal that is in the national interest.”