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Theresa May asks for an extension of Brexit, a pound without reaction

Theresa May asks for an extension of Brexit, a pound without reaction

created Michał SielskiApril 5 2019

Prime Minister Theresa May sent an official letter to the President of the European Council, Donald Tusk. It asks him to extend the final date of departure of Great Britain from the European Union until the end of June. Meanwhile, Donald Tusk wants to give the British even a year of time for the final decision.

Read: Brexit delay passed with one voice

Just a few weeks ago, any information about the Brexit date electrified the market, and you could earn (or lose) very well on the rate of the British pound even on rallies lasting several minutes. Meanwhile, on Friday, when the BBC released information that the British Prime Minister is asking the European Union to extend Article 50 - that is, to delay Britain's exit from the EU - until the end of June, pound to dollar exchange rate He has not changed practically.

gbpusd chart

GBP / USD H1 chart, source: XTB xStation

The market no longer believes politicians

It clearly shows how the market is tired of political scuffles and insensitive to further information that - de facto - do not change much. Before, however, it was completely different and virtually every statement about the Brexit date caused a swing in the course.

GBP chart

GBP / USD H1 chart, source: XTB xStation

When will Britain leave the EU?

The question is whether the UK will come out of the European Union only when and under what conditions. Theresa May admits that the British do not want to organize elections to the European Parliament, so if the House of Commons ratifies the agreement setting the exit conditions earlier, Brexit will take place earlier.

Donald Tusk claims that UK can get even 12 months to agree on Brexit details. However, all EU member states must agree.

However, the biggest threat is still the so-called hard Brexit, ie the exit of Great Britain from the European Union without a contract. According to most economists, it would be  tospore a threat to the economy not only of the United Kingdom but also of the European Union, and thus of all residents.

Great Britain loses on Brexit

Meanwhile, the rating agency S&P Global Ratings has calculated that the UK economy has been shrinking since the Brexit referendum, which took place  in June 2016. The agency argues that Great Britain's GDP shrank by 2,9%. Ten quarters have passed since the referendum, in which the economy could be bigger by around 6,6 billion pounds. This means that the UK lost around £ 66bn during that time.

Even worse data are presented by Goldman Sachs or Gertjana Vlieghe from the Bank of England. According to them, Brexit consumes even 600-800 million pounds per week.

Why is this happening? Automotive concerns operating in Great Britain close their branches. Banks and insurance funds are also moving beyond the islands. Inflation is also rising, which according to S&P increased by approx. 1%. This affected British savings.

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About the Author
Michał Sielski
Professional journalist for over 20 years. He worked, among others, in Gazeta Wyborcza, recently associated with the largest regional portal - He has been present on the financial market for 18 years, he started on the Warsaw Stock Exchange when the shares of PKN Orlen and TP SA were just being introduced to the market. Recently, his investment focus has been exclusively on the Forex market. Privately, he is a parachutist, a lover of Polish mountains and a Polish karate champion.