Forex GBP/USD

PM Johnson Complies With Benn Act; Asks EU For Brexit Extension

Following the passage of the Letwin Amendment on Saturday, October 19th, 2019, Prime Minister of the United Kingdom (UK), Mr. Boris Johnson had announced that he has no intention of requesting the European Union (EU) for a further delay on Brexit. In compliance with the Benn Act, however, sources have reported that the Parliament has forced PM Johnson to send a letter and ask for Brexit extension. Mr. Donald Tusk, president of the European Council, has verified that the request has been received and he has been in contact with Mr. Johnson over the phone.

Implications Of The Benn Act

According to the Benn Act, if the voting members of the Parliament didn’t agree to the presented deal on Saturday, PM Johnson was to request for Brexit extension to the European Union. The proceedings of October 19th, 2019 highlighted that the UK’s House of Commons is in favor of the Letwin Amendment (322 to 306 votes), which pushes the Prime Minister to comply with the Benn Act.

As per the recent development, the meaningful vote in the Parliament’s special session has been delayed to Tuesday, October 22nd, 2019, following the passage of the Letwin Amendment. While the Prime Minister sent the letter in order to comply with the law; keeping in line with his pledge to not ask for an extension, he refused to sign it as a sign of protest. The European sources, however, have reported that the lack of a signature doesn’t stop the request from being considered.

The Benn Act was approved to protect the United Kingdom from departing the Eurozone without a deal. According to the financial experts, compliance with the Benn Act is positive for Sterling in the short and long run. In an event that the House of Commons passes all legislation before the deadline of October 31st, 2019, the UK will be able to leave the EU in an orderly and organized fashion. Provided that approval from the Parliament is not received, it will be certain for Brexit to be stretched further.

Overview Of Sterling’s Performance Amidst Brexit Affairs

After the announcement last week that the leaders of the European Union have approved the Brexit deal, Pound Sterling managed to break major resistances and hiked to around 1.30 level (highest in the past five months). Compliance with the Benn Act following Letwin Amendment, however, is again expected to keep the GBP/USD pair under pressure. The pair is currently trading at 1.2929. If the UK succeeds in avoiding a no-deal Brexit, further upward rallies may be observed this week, according to the financial analysts.

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