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Pound Pares Gain as Government Denies Brexit Date May Be Delayed

ForexJan 11, 2019 07:00AM ET
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© Bloomberg. British ten pound banknotes stand in this arranged photograph in London, U.K., on Tuesday, Sept. 19, 2017. Strategists are revising their estimates for the currency after its best week since 2009 saw it gain almost 3 percent as the Bank of England signaled it would look to withdraw stimulus “over the coming months.” Photographer: Chris Ratcliffe/Bloomberg

(Bloomberg) -- The pound rallied to the highest since November on a report that Brexit could be delayed beyond the March deadline, before paring gains as the government ruled out an extension.

The currency climbed as much as 0.8 percent after the Evening Standard newspaper cited unidentified cabinet ministers as saying a delay to the March 29 Brexit deadline was looking increasingly likely. Sterling then slipped back as a spokeswoman for Prime Minister Theresa May said it wasn’t government policy to extend Article 50.

The size of the move shows the market is poised to jump on good news, said Credit Agricole (PA:CAGR) SA’s head of Group-of-10 currency strategy Valentin Marinov. May’s Brexit deal is widely expected to be rejected by Parliament in a vote on Tuesday.

“There remains an overhang of pound shorts,” said Marinov. “The squeeze in the event of more positive developments could be brutal and propel the pound back to levels last seen in the first half of 2018.”

The pound was up 0.4 percent at $1.2794 by 11:23 a.m. in London, after rising to $1.2851, the highest since Nov. 26. The currency is heading for a fourth weekly gain, its best run in nearly a year, after a bruising 2018 saw it lose more than 5 percent against the dollar on fears of the U.K. crashing out of the European Union without a deal.

Pound Pares Gain as Government Denies Brexit Date May Be Delayed
 

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