Theresa May will today meet with French and German leaders, Emmanuel Macron and Angela Merkel, in a bid to convince the heads of the two most influential nations in the EU to back her wish of a Brexit extension until June 30th. These meetings come ahead of the crunch EU summit on Wednesday where EU leaders will discuss how long an extension to offer the UK, and there is currently an array of opinions on this matter. Macron for example is thought to want to offer a short, two-week extension to allow both sides to prepare for a ‘no deal’ whereas Donald Tusk is willing to propose a 12 month ‘flextension’ which would allow the UK to exit the EU as soon as a deal is agreed in Parliament.
The pound is holding steady this morning ahead of these meetings but there is huge potential for Sterling volatility over the next couple of days. Should May get her wish of an extension until the end of June or if an extension along the lines of the one proposed by Donald Tusk should be agreed then expect the pound to shoot up, as the UK will avoid a ‘no deal’ Brexit on Friday. Worst case scenario for the pound is that the 27 EU member states can’t reach an agreement. As the UK is currently set to leave the EU this Friday this could prompt a vote in Parliament on Thursday providing MPs one final chance to approve the current deal or leave without one on Friday, which would be potentially catastrophic for the pound.
The US Dollar has struggled over the past couple of days after a string of good economic data from across the globe has eased worries about the global economy, limiting safe haven flows in to the greenback.
Commodity linked currencies gained this morning after a surge in oil prices. Com-Dols such as the Australian Dollar and Canadian Dollar spiked after oil prices rose the highest level in five months.