Brexit: UK PM Johnson officially asked for an extension, GBP/USD positive

UK Prime Minister has officially sent a letter to ask for Brexit to be delayed. European Council President Donald Tusk has confirmed receiving the request and confirmed the two men have spoken on the phone.  

Johnson was forced to send the letter to comply with the Benn Act – which stated that the PM must do so if a parliament fails to instruct otherwise by the end of October 19. Earlier on Saturday, MPs voted in favor of an amendment which forced the PM to do so if all the legislation has not passed. Following the announcement of the vote on the “Letwin amendment, the special session of parliament was cut short, delaying the Meaningful Vote on the Brexit deal to early in the week.  

Johnson was reluctant to delay Brexit and did not sign the letter. Nevertheless, he complied with the law and broke his pledge not to ask for an extension. EU sources have told reporters that the lack of the signature is meaningless, and they will consider delaying Brexit.  

The implementation of the Benn Act – which was intended to prevent the UK leaving the EU without a deal – is positive for the pound. The House of Commons still has time to approve the Brexit agreement and pass all relevant legislation before October 31 – thus leaving with a deal. In case it is voted down, the bloc will likely agree to postpone Brexit.  

Overall, avoiding a cliff-edge Brexit may push GBP/USD higher early in the week. Cable closed at 1.2973 on Friday, near the five-month high of 1.2989.