Six-month Brexit delay fails to boost sterling

The pound’s exchange rate was little changed on Thursday morning despite another extension of the deadline for the UK’s departure from the EU as the prospect of prolonged uncertainty and Brexit fatigue muted investors’ appetite for sterling.

The currency traded at $1.3081 against the dollar last Thursday, little changed from its April 1 exchange rate of $1.3070. Contracts that predict sharp price moves on a one-month time horizon have sold-off sharply, reducing the likelihood of exchange rate swings in the next four weeks by some 34 per cent against the dollar in the past week.

Last Wednesday evening EU leaders and UK prime minister Theresa May agreed to a “flextension” that could see Britain leaving the EU before the October 31 deadline if MPs agree on a deal. EU leaders have already ruled out reopening negotiations on the deal that Mrs May put to parliament three times unsuccessfully. But the extension means more uncertainty for longer for sterling investors, who are staying away from the currency until more concrete details emerge.