Pound Sterling jumped 0.68 percent against the single currency to €1.1609 at 11:20am, according to Bloomberg, having opened at €1.1531. The British currency has continued to rise throughout the morning, having increased to €1.1591 by 8am. The pound has also made massive gains against the US dollar, jumping 0.72 percent to £1.3191 from an opening price of $1.3097 – it’s highest level since October.
Sterling spiked to its highest against the US dollar since late January after Bloomberg News reported Mrs May was considering delaying the March 29 deadline for the UK’s exit from the European Union.
Mrs May met her Cabinet and then announced in the House of Commons a proposal to allow MPs the opportunity to delay Brexit beyond March 29 if she can’t win a ‘meaningful vote’ by the middle of next month.
If the Commons rejected the deal again, Theresa May would then give MPs a vote on whether to press ahead with a no-deal Brexit on March 29, or to opt for a “short extension” to the Article 50 process.
Pound LIVE: Sterling has started extremely strongly in early morning trading
Mrs May’s announcement in the Commons saw the pound dip slightly against both the euro and the US dollar after she issued a warning to MPs.
After outlining her plans Mrs May said: “They are commitments I am making as Prime Minister and I will stick by them, as I have previous commitments to make statements and table amendable motions by specific dates.”
However, she added the extension would not take no-deal off the table but would create a “much sharper cliff-edge”.
The Prime Minister also said the Government would be increasing no deal preparations.
But speaking in Sharm el-Sheikh on Monday following a summit of EU and Arab leaders, Theresa May again ruled out delaying Brexit.
She said: “An extension to Article 50, a delay in this process, doesn’t deliver a decision in parliament, it doesn’t deliver a deal.
“What it does is precisely what the word ‘delay’ says. It just delays the point at which you come to that decision.
“And I think that any extension of Article 50, in that sense, isn’t addressing the issue. We have it within our grasp.”
Pound LIVE: Sterling has surged to a four-week high against the US dollar
GBP has seen the biggest price moves in G10 overnight as it took two legs higher on two Brexit-related stories – Labour’s backing of a second referendum and PM May’s apparent concession on delay
Adam Cole, a foreign exchange strategist with RBC Capital Markets, told poundsterlinglive.com: “GBP has seen the biggest price moves in G10 overnight as it took two legs higher on two Brexit-related stories – Labour’s backing of a second referendum and PM May’s apparent concession on delay.
“Further upside should be limited as there is unlikely to be a Commons majority in favour of a second referendum and Brexit delay is already baked into market expectations.”
The Commonwealth Bank of Australia (CBA) told poundsterlinglive the pound could lift by up to two percent “in a ‘knee jerk’ reaction if Brexit is delayed”.
Joseph Capurso, a foreign exchange strategist with CBA, said: “The length of the delay is not known at this stage.
Pound LIVE: Theresa May has insisted Brexit on’t be delayed
“If the media reports are true – and this is not guaranteed – Prime Minister May is proposing to make a big change in policy.
“The potential for increased GBP volatility is high in the next two days.”
The pound also surged against major currencies after Mr Corbyn said Labour would support a ‘People’s Vote’ if MPs rejected a plan he will table today.
This would see Britain withdraw from the European Union but remain closely aligned with the bloc.
Even if this plan is defeated in the House of Commons, Mr Corbyn will also back delaying Brexit beyond the proposed leaving date of March 29 – something Mrs May insists won’t happen.
Pound LIVE: The British currency has also made large gains against the euro
He said: “One way or another, we will do everything in our power to prevent no-deal.
“That’s why, in line with our conference policy, we are committed to also putting forward or supporting an amendment in favour of a public vote to prevent damaging Tory Brexit being forced on the country.”
The promise of supporting another referendum on Brexit has been interpreted as being a positive one for the pound, according to poundsterlinglive.com.
Viraj Patel, a foreign exchange strategist with Arkera, told poundsterlinglive.com following Mr Corbyn’s announcement: “GBP’s path of at least resistance is looking up from here.”
Mr Patel is forecasting two scenarios for the pound against the US dollar: initially rising to $1.32-$1.33 but then fading, or increasing to $1.34-$1.35 with a second referendum.