Currencies

Dollar, pound steady as EU considers granting Brexit delay

The new £10 note is seen alongside euro notes and US dollar bills on October 13, 2017 in Bath, England.
Matt Cardy | Getty Images

The dollar and British pound were steady on Wednesday as European Union leaders consider Britain's request for a Brexit delay, and are expected to grant a three-month extension to the Oct. 31 deadline for its departure.

European Council President Donald Tusk said on Twitter he had recommended late on Tuesday that EU leaders back a delay. British Prime Minister Boris Johnson was forced by parliament to ask for three months, but there is still a chance that some EU countries, notably France, could demand a shorter extension.

Johnson paused his bill to enact the Brexit deal he struck last week with the European Union's 27 other member states, after dramatic votes on Tuesday in which the British parliament accepted the deal in principle but rejected a three-day timetable for passing the necessary legislation.

Foreign exchange trading was generally quiet following a sell-off Tuesday that saw the pound drop against both the dollar and the euro. Against the dollar, the pound was last down 0.02% to $1.287. Against the euro, the pound was 0.8% stronger to 86.34 pence.

The dollar index was up 0.08% at 97.606.

"With Brexit on ice for now, attention has shifted to the EU to see if indeed it grants the UK more time likely three months or less. While weaker, the bottom hasn't fallen out of the pound given that a no-deal Brexit has seemingly been taken off the table. Expecting the unexpected with respect to Brexit and sterling remains a central theme," said Joe Manimbo, senior market analyst at Western Union Business Solutions.

Johnson did not follow through on his threat to pull the deal if parliament defeated him on the timetable, which was understood by the market as all but eliminating the chances of no-deal exit.

"Things could change very quickly today, depending on the EU response," said Adam Cole, a strategist at RBC Capital Markets, adding, however, that he did not see much downside risk now that a no-deal Brexit appeared to be ruled out.

Safe haven currencies earlier Wednesday had been boosted by the Brexit uncertainty. But after the EU was seen as likely to approve an extension, gains in the Japanese yen and Swiss franc faded. The yen was last marginally lower at 108.55 per dollar, with the franc at 0.991 per dollar.