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Sterling unimpressed after Brexit date delayed again

Thursday,   11-Apr-2019   04:40 PM (IST)

The pound stalled on Thursday and was stuck in a narrow trading range, reflecting uncertainty after European Union leaders extended the deadline for Britain to leave the bloc until October. A decision to delay Brexit until Oct. 31 taken at a summit in Brussels means Britain will not crash out of the bloc on Friday without a treaty to smooth its passage. But with almost no clarity on when, how or even if Brexit will happen, conviction bets on sterling rising or falling sharply remain few and far between and the currency remains stuck just below $1.31. The immediate advantages for the currency, as well as UK and European equities, include the removal of a near-term, no-deal Brexit. But that is offset by the prospects of British Prime Minister Theresa May’s replacement, a general election and the threat to the British economy of prolonged uncertainty. Concern about big swings in the pound have dropped off significantly according to one-month implied volatility, which fell to a seven-month low. The pound has been stuck this month between $1.30 and 1.32, with less volatility than in earlier periods of Brexit-related uncertainty. On Thursday it edged higher to $1.3098, while against the euro it slipped marginally to 86.14 pence per euro.