Pound Spikes Up As U.K. PM Theresa May Considers Brexit Delay

The pound was higher against its major counterparts in the European session on Tuesday on hopes for a delay to Brexit, after a media report that the UK PM Theresa May is set to propose formally dismissing no-deal Brexit at a cabinet meeting later in the day.

The Sun newspaper reported that May will suggest to cabinet that she formally rules out a no-deal Brexit on March 29, in order to pave way to delay the departure from the European Union.

The decision comes after the opposition Labour Party supported a second referendum on Brexit, if no parliamentary majority would be secured for Brexit withdrawal deal.

Speaking to the Treasury Select Committee, Bank of England Governor Mark Carney warned that splitting from the EU without a deal would harm U.K. economic growth.

Carney told that the Bank is ready to inject more liquidity into the U.K. financial system, as required.

The BoE Chief remarked that a weaker currency after no-deal Brexit crisis wouldn't provide growth boost. "The role of a flexible exchange rate is to act as a shock-absorber. A no-deal, no transition Brexit would be a shock, it would be a negative shock," he cautioned.

The currency has been trading higher in the Asian session on the prospect of a Brexit delay.

The pound appreciated to 0.8588 against euro, its highest level since May 2017, and marked a 1 percent gain from a low of 0.8671 touched at 5:00 pm ET. The pair was valued at 0.8671 at Monday's close. The pound is seen finding resistance around the 0.84 level.

Survey data from the GfK showed that Germany's consumer confidence is set to hold steady in March, amid the sustained sharp decline in economic expectations and stable income expectations.

The forward-looking consumer confidence indicator showed a reading of 10.8 for March, same as in February. The outcome was in line with economists' expectations.

The pound added 1.1 percent to more than a 4-month high of 1.3238 against the greenback, following a decline to 1.3093 at 5:00 pm ET. The pound-greenback pair had ended yesterday's trading at 1.3095. Next key resistance for the pound is seen around the 1.34 region.

After dropping to 1.3099 against the Swiss franc at 5:00 pm ET, the pound snapped back to touch more than 7-month high of 1.3240. At yesterday's close, the pair was quoted at 1.3103. Continuation of the pound's uptrend may take it to a resistance around the 1.345 level.

The pound was up 1 percent at more than a 3-month high of 146.74 against the yen, bouncing off from a low of 145.33 seen at 5:00 pm ET. The pound was trading at 145.43 a yen at Monday's close. Further uptrend may take the pound to a resistance around the 149.00 area.

Looking ahead, U.S. consumer sentiment index and Richmond Fed manufacturing survey for February, housing starts, building permits, S&P/Case-Shiller home price index, all for December, are scheduled for release in the New York session.