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Sterling Tiptoes Up As PM May Seek Brexit Delay

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The pound edged higher for a second consecutive day on Tuesday as British Prime Minister Theresa May travels to Berlin and Paris to argue for a Brexit delay though gains were tiny before an emergency European Union summit on Wednesday.

Sterling rose 0.1 per cent to 1.3074 dollar in quiet trading and is still more than 2 per cent below a nine-month high of nearly 1.34 dollar hit last month. Against the euro, the pound was broadly steady at 86.23 pence.

“The pound has seen support from reports of May considering allowing a second referendum, but progress may be needed on the cross-party talks for the pound to break higher,” Morgan Stanley strategists said in a note.

While May travels to Berlin and Paris ahead of Wednesday’s summit in Brussels, British lawmakers will hold a 90-minute debate on her proposal to delay Britain’s EU departure date to June 30 from April 12.

The debate has been forced on the government by parliament passing a law on Monday which will give lawmakers the power to scrutinise and even make legally binding changes to May’s request to extend the Article 50 negotiating period again.

Currency derivative markets painted a cautious outlook with implied volatility gauges for the pound remaining elevated compared to other currencies such as the euro and the yen.

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