In a press conference held during the spring meetings of the IMF and World Bank in Washington, Managing Director Christine Lagarde revealed that Brexit's 6-month delay avoided the current conditions from the Brexit No Deal scenario that could potentially suppress the global economy.

Extension Time is Given

It should be known beforehand, the European Union gave an extension of time to the UK until October 2019 to leave the EU membership officially. This could provide more time for Britain to finalize the Brexit agreement, which has been a major obstacle. At least, Britain will not leave the European Union on April 12 without an agreement. This gives time for further discussion between the various parties involved in the UK. It might also provide time for economic actors to prepare themselves for all options, especially related to industry and workers, to try to secure their future.

According to Christine Lagarde, the postponement of Brexit until October 2019 can at least provide additional time for related parties to avoid the potential of the Brexit Deal.  However, market participants view that Brexit suspension will extend uncertainty about when, how, or even if Brexit occurs.

BoE Governor Voices

Responding to the extension of the Brexit deadline over the next six months, the governor of the British Central Bank (BoE), Mark Carney, co-revealed his comments. The uncertainty facing the UK business sector is getting worse because of Brexit, hurting investment activities and creating severe challenges in the future. Although the UK labor market is quite good, business slump has hampered investment.

Carney also added that although Brexit risk without an agreement had been eliminated, BoE still had to see how effectively the extra time was spent to achieve the best solution. Delay will give a lot of time to the political process, especially in the UK, and guide consensus in the House of Commons to form agreements. 

Brexit Delayed Until October, Pound Sterling Remains Sluggish

The GBP / USD currency pair only rose slightly after the European Union granted Britain's request for a Brexit delay for the second time in a month. The GBP / USD currency pair only rose slightly after the European Union granted Britain's request to delay Brexit for the next several months. On the beginning of the European session, Sterling traded around 1.3087 against the US Dollar, still near yesterday's closing level. Meanwhile, EUR / GBP were almost static around the level of 0.8615, and GBP / JPY only rose 0.1 percent to the level of 145.40s.

In the New York session, officials of the European Union were finally willing to give Brexit extension until the 31st of October, as long as there were no specific agreements that could be agreed by both parties. This deadline is flexible; that is, Brexit can be done before 31 October, if a certain agreement has been reached. The postponement of the Brexit deadline was longer than the delay until June 30 desired by PM Theresa May, but shorter than market expectations. Previously, analysts had expected a delay until December 2019 or even longer.

The Pound barely budged at all. The Brexit delay for the second time in a month is still considered to be in line with the expectations of the majority of market players that Britain and the European Union will jointly try to avoid the worst Brexit No-Deal scenario. However, the decision also does not provide any clarity about how Britain will realize its plan to leave the European Union. At least, there will be no 'Brexit Deal' this month. However, it seems difficult for parliament to reach an agreement. After the turmoil subsides, Sterling is expected to sell.