Sterling gives up 5-month high on Brexit delay request

The British pound fell during the European trading hours on Monday, to drop for the first time in the last 4 days against the US dollar, and sold off from its 5-month high on profit-taking, after the British Parliament forced PM Boris Johnson to request another extension for the Brexit deadline from the EU, to delay the 3-year divorce battle for another three months.

GBP/USD fell by 0.6% to $1.2874, after opening at $1.2951, with an intraday high of $1.2951.

Sterling gained 0.7% against the US dollar on Friday, its fourth straight daily gain, after it hit a 5-month high of $1.2990 on Wednesday.

During the last week, the British pound gained 2.7% against the US dollar, to score its third weekly gain in the longest weekly gains streak in 2019, due to positive Brexit progress.

Earlier, the British Prime Minister, Boris Johnson, agreed on a new draft Brexit deal with the EU leaders, which provides the UK an exit on October 31 in an orderly fashion, as he described the draft deal as a great deal that reflects the hard work made by the United Kingdom and the European Union.

While in order to implement the deal, the British PM had to acquire the British parliament ratification during its vote on last Saturday, which didn't happen, and the parliament insisted on another 3-month extension for the Brexit deadline.

The House of Commons approved MP Oliver Letwin amendment by 322 votes to 306, which states that in case Johnson's draft deal is not formally ratified, it automatically activate the recent legislation that was already passed by the parliament, in which the prime minister is obligated to request another extension from the EU postponed by three months.

Which what forced the British PM Boris to send an "unsigned letter" to Brussels to request a 3-month extension for the Brexit deadline, but he tailed it with another letter the includes his disapproval for the extension beyond the scheduled on October 31.

And the president of the European Council, Donald Tusk, confirmed it as he stated via Twitter that the deadline extension request has arrived, and added that he will start consulting the EU leaders on the response.

Although, several European leaders have previously expressed the disapproval for an extension, but their refusal for the extension request is unlikely, considering it's the least damaging scenario for both the UK and the EU to avoid a chaotic exit.

In the same context, Goldman Sachs on Sunday raised the probability for a Brexit with a deal to 50%, and left its view for the exit date on October 31.

The markets focus will turn during this week to the British parliament vote on Johnson's draft deal, amid hopes for it to be approved, considering it is the one of the best solutions currently, until the UK emerges from the dark Brexit tunnel.