British pound gains on mounting possibility of a delay in Brexit deadline 

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Sterling added to gains on Wednesday as investors increasingly focused on mounting possibility of a delay to the March 29 Brexit deadline.

The U.K. currency defended its gains from the past sessions, becoming among the best performing major currency.

On Tuesday, Prime Minister Theresa May said lawmakers would be able to vote to delay Brexit should her deal get rejected in a March 12 vote. Parliament was initially expected to decide on May’s deal on Wednesday.

Lawmakers are discussing further proposals as the government is expected to drop the possibility of a no-deal outcome. Meanwhile, independent members of parliament said they would propose a second referendum.

Sterling rose to $1.3305, from $1.3252 late Tuesday in New York. The sterling hit $1.1337 during the session, its highest level since June 2018.

The pound also strengthened against the euro, with the shared currency buying £0.8545, down 0.6%.

“While the delay helps avoid some of the consequences of an abrupt departure from the EU it also is keeping industry in a sort of limbo that doesn’t allow for long term planning and hampers a number of business decisions,” said Fiona Cincotta, senior market analyst at City Index, in emailed comments. “Brexit could end up being delayed until 2021, which, for a lot of businesses will mean operating with one hand tied behind their backs for another two years.”

The U.S. dollar inched higher in late Wednesday trading as risk-sensitive currencies sold off. The ICE U.S. Dollar Index was last up 0.2% at 96.169.

In U.S. economic data, the advanced trade deficit in goods rose 12.8% to $79.5 billion in December.

Federal Reserve Chairman Jerome Powell appeared in front of members of the House and mostly reiterated the central bank’s cautious stance on monetary policy.

In Tuesday’s remarks before members of the Senate, Powell stuck to his dovish script but also noted that the U.S. economic outlook remained favorable, despite tense trade relations with China and Brexit posing risks to international economies.

Elsewhere, the euro was weaker at $1.1369, versus $1.1390 late Tuesday.

Wednesday’s eurozone data for February were mixed, with the services confidence indicator beating estimates but industrial confidence slipping more than expected. Indicators for economic confidence, consumer confidence and business climate met expectations.

The Canadian dollar held its strength versus the greenback following January inflation data that were in line with estimates. Consumer prices rose 1.4% year-on-year in January. One U.S. dollar last bought C$1.3146, compared with $1.3169 late Tuesday.

Source: MarketWatch

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