Brextension: A complicated solution as pound continues plunging
The EU says it is prepared to expand the proposed length of the post-Brexit change period if the UK needs. But how will such changes affect the Pound? In this article, we will review the latest developments concerning this matter.
The Pound Sterling went through a series of rapid decline that lasted several weeks as the currency lacks the strength needed to not interfere with Brexit’s transition period.
No leap forward can be noticed anytime soon after discussions between the EU and British diplomats were carried out with sentiments of panic. Those who examined negotiations closely stated that the Pound could be in a more fragile circumstance and all roads tend to lead towards a possible "Brextension". The latter refers to stretching the initially agreed transition period by an additional year, before Britain leaves the European Union, which explains why the sterling has encountered a few misfortunes.
PM Theresa May stated to EU representatives on Wednesday afternoon that she is ready to give green lights on lengthening the transition period – a proposition introduced amid heated talks over the Irish backstop concern, which dissolved without finding mutual ground this past weekend.
Entrepreneurs seem to have respected the concept, "if extending the transition period makes the Withdrawal Agreement easier to agree it should be welcomed. Securing the transition period remains the top priority for business to protect jobs and investment," affirmed Carolyn Fairbairn, CBI Director-General.
MP Nick Boles think otherwise stating that any effort to extend the transition period would result as “desperate last move”, cautioning that May would start losing her own party’s trust. After an interview with BBC Radio 4 on Thursday, he said that the European Union was asking ridiculous adjustments.
On the off chance that May is at last expelled by an undeniably frightened Conservative party the odds of a 'no agreement reached' Brexit will outpour, and the Sterling will probably endure a critical withdraw.
The 'Brextension' is in this way more inclined to be the scourge of the Pound than its guardian angel.
Donald Tusk however affirmed that lacking development done in the course of recent days to justify another more convincing summit one month from now for conclusive concurrence on the terms of the arrangement, as already planned.
"I stand ready to convene a European Council on Brexit, if and when the EU negotiator reports that decisive progress has been made," said Tusk. "And, we should be clear that as for now, not enough progress has been made."
Addressing after Tusk, May said Thursday there would be more challenges are on the way as they achieved the last phases of the discussions, yet included that she was certain about her capacity to anchor a decent deal pleasant to all parties. "We trust extended transition won't be required," she added.
To sum up, Pound-to-Euro will be on the watch as things move forward in the political spectrum. Either an extension will be necessary or not one thing is for sure, a new wave effect is expected on the currency pair as of 2019.