Sterling pressured as Britain's May tries to agree Brexit extension
* May asking EU for extension; uncertainty about how long
* Sterling earlier buoyed by UK jobs growth data
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
By Saikat Chatterjee
LONDON, March 19 (Reuters) - The pound reversed earlier
gains on Tuesday on concerns that Prime Minister Theresa May's
request for postponing Brexit was running into complications
with the European Union.
May is asking the EU to delay Brexit by at least three
months after her plans for another vote on her twice-defeated
divorce deal were thrown into crisis.
Markets are convinced an extension will be granted, but
media reports that some EU officials are reluctant to grant an
extension simply to gain time weighed on the British currency.
The pound fell from as high as $1.3311 to $1.3260,
up slightly on the day. Sterling also dropped versus the euro
and by 1455 was 0.1 percent lower at 85.59 pence.
Societe Generale analyst Kit Juckes noted that the betting
market is "convinced that there will be an extension, thinks a
no-deal exit is highly unlikely and is warming to the idea of a
"That's not out of line with the way sterling has traded in
the last 24 hours, though market chatter suggests that an awful
lot of people think the risk of a no-deal exit is a good bit
higher than the market or the betting public believe," he said.
The British currency rallied to a 9-month high against the
greenback of nearly $1.34 last week, as investors largely priced
out a no-deal Brexit scenario.
Sterling held near the day's highs earlier on Tuesday after
data showed that British employers increased their hiring at the
fastest pace in three years - helping to push the unemployment
rate to its lowest since the start of 1975.
But the currency got off to a volatile start to the week,
shedding half a percent on Monday after John Bercow, the speaker
of parliament, said May's Brexit deal could not be voted on
again unless it was substantially altered.
The pound's fall on Bercow's ruling was quickly reversed,
partly on confusion over the next steps and a reluctance to take
directional bets, but also because there was little disturbance
to the running market assumption of "deal or delay".
"The predominant notion adopted by the market is that, as
long as the worst case scenario of hard Brexit is avoided by
delaying Brexit, the pound is a buy on dips," Rabobank
strategists said in a note.
Morgan Stanley strategists also said the pound remained a
buy on dips. The U.S. bank's positioning tracker showed broader
market positions on the pound was broadly neutral.
Despite the latest political developments, various gauges of
volatility indicators for the pound ticked lower on Tuesday,
reflecting a broader drop in forex volatility.
(Additional reporting by Tommy Wilkes;
Graphics by Sujata Rao;
Editing by Alison Williams)
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