UK Prime Minister Theresa May and European Commission President Jean-Claude Junker have promised to round off Brexit negotiations before the Spring European Council on March 21.
May had just postponed yet another “meaningful vote” deadline to March 12 earlier on Monday. However, she agreed to a new target date following a high-ranking summit at Sharm el-Sheikh in Egypt, where she met with EU and Arab leaders.
While the British PM defended her decision not to extend Article 50, Leo Varadkar, the Irish Prime Minister, told reporters that he was “not playing chicken” with the Brexit case. He added that he was more than willing to discuss “mechanisms” over the backstop plan in order to avoid a hard border.
The New Deadline
The new deadline comes as May tries to cut-off MP efforts to extend Brexit talks. Her attempts are aimed at avoiding a hard Brexit and placing pressure on European leaders to explore “alternative arrangements” after last month’s embarrassing defeat in the Commons.
Meanwhile, the British Pound started the week on good footing against its US counterpart. This came as risk appetite increased on the back of news headlines that Brexit negotiations would be extended.
However, gains were short-lived and the relief transitory. Sellers showed up at the $1.31 psychological barrier with further clues expected to be seen soon.
GBP/USD has rallied from the low of $1.2775 to the $1.31 handle, while momentum formed lower lows. This provides market participants with a hidden bullish divergence. Although prices trade within a tight range of ~100 pips, the pound remains somewhat supported despite the negative effect from the US open. It could extend further towards $1.32 over the next session(s), where the 1.618% Fibonacci is set, provided that the ascending trendline holds firm.