The Prime Minister is set to ask leaders of the 27 remaining EU nations to grant her an extension of Article 50 to June 30. But speaking last night on the eve of a crunch summit in Brussels, European Council president Donald Tusk appeared to dash Mrs May’s hope for a shorter delay, and instead suggested that EU leaders grant the UK a longer extension of up to one year. The pound is keeping a close eye on Brexit movements today, with just two days until the UK is set to leave the EU. The current default position is for the UK to part ways without a deal in place at 11pm on Friday, April 12.
Sterling is currently trading at €1.1599 against the euro and $1.3068 versus the US dollar at 8.45am UK time.
Connor Campbell, analyst at Spreadex, said: “Following reports that the EU will offer Theresa May an Article 50 delay of up to a year, but with the Prime Minister herself still chasing June 30 as the exit date, the pound was tentatively positive after the bell.
“The pound was pushing 0.2 percent higher against both the dollar and the euro.”
Mr Tusk said in a letter there was “little reason to believe” Mrs May could complete her Brexit deal by the end of June.
He called for the European Council to discuss an alternative, longer extension lasting “as long as necessary and no longer than one year”.
Mr Tusk wrote: “The flexibility would allow to terminate the extension automatically, as soon as both sides have ratified the Withdrawal Agreement.
“The UK would be free to leave whenever it is ready. And the EU27 would avoid repeated Brexit summits.
“Importantly, a long extension would provide more certainty and predictability by removing the threat of constantly shifting cliff-edge dates.
“Furthermore, in the event of a continued stalemate, such a longer extension would allow the UK to rethink its Brexit strategy.”
The pound is likely to be influenced by the release of both UK gross domestic product (GDP), manufacturing, construction and trade data today.
Analysts are split on how GDP for February will pan out, with some City economists predicting 0.3 percent growth while others are guessing a 0.2 percent contraction.
Mr Campbell said: “Both the monthly GDP and manufacturing production readings look set to be hit by Brexit anxiety.
“The former is expected to drop from 0.5 percent to 0.2 percent, with the latter suffering a similar slide from 0.8 percent to 0.2 percent.”