- Posted by currencies in Rate Alerts
- April 11, 2019
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European Union leaders gave Britain six more months to leave the bloc, more than Prime Minister Theresa May says she needs but less than many in the bloc wanted, thanks to fierce resistance from France.
The summit deal in Brussels meant Britain will not crash out on Friday without a deal. But it offers little clarity on when, how or even if Brexit will happen, as May struggles to build support in parliament for withdrawal terms agreed with the EU last year.
Summit chair Donald Tusk and others argued that obliging May to accept a much longer deadline than the June 30 date she had sought could help swing pro-Brexit hardliners within her own Conservative party behind her deal, fearing a long delay could see the British public turning against a withdrawal altogether.
The result was a compromise on the date, with a deadline of Oct. 31, for Britain to leave, deal or no deal — on condition that May holds an election on May 23 to return British members to a new European Parliament that convenes in July, and that it pledge not to disrupt key EU decision-making before it leaves.
If May fails to win over lawmakers on the treaty or fails to hold an election, Britain will leave with no deal on June 1.
The euro slipped on Wednesday, after European Central Bank chief Mario Draghi warned that risks to the economy remained to the downside.
While equity markets also climbed initially, they gave back their gains on disappointment over the lack of details on a new round of cheap bank loans and the ECB’s mooted plans to offset the impact of negative interest rates on banks.
Draghi confirmed the ECB was considering if measures were needed to mitigate the impact on banks of its negative deposit rates as well as the pricing of new cheap two-year loans to banks, but said it was too early to decide.
The Federal Reserve is likely to leave interest rates unchanged this year given risks to the U.S. economy from a global slowdown and uncertainty over trade policies and financial conditions, according to the minutes from its March 19-20 policy meeting. They will assess this as the year goes on and maybe even look to cut rates if needed.