Brexit: May will write to Tusk to request extension

A 10 Downing Street spokesman said the Prime Minister would sit down with her pen and paper on Tuesday or Wednesday, ahead of the European Union leaders' summit that begins on Thursday.

But after a 90-minute cabinet meeting on Tuesday, May was still undecided on what to ask for and how, according to tweets from Westminster lobby journalists.

Number 10 sources say still final decision on what to ask for and how

— Laura Kuenssberg (@bbclaurak) March 19, 2019

Asked whether the PM would ask for a long extension with the option of a shorter one if MPs pass her deal, a spokesman for Number 10 would not confirm or deny this.

EU sources have suggested in recent days that an extension to the Article 50 deadline would be readily granted, though there was a great difference in opinion over the length.

May had hoped to ask for a shorter delay if she was able to win over doubters of her Brexit deal before holding a third 'meaningful vote'.

But a spanner was thrown in the works by speaker John Bercow's ruling on Monday that the government could not force MPs to vote for a third time on May's Brexit deal unless fundamental changes were made.

As May's deal has twice been resoundingly defeated in parliament, Bercow said neither another vote nor a change in "an opinion" about the deal would be enough to allow a third tilt at a vote, though he did agree with MPs suggestions that there were ways around the ruling. Tuesday's cabinet meeting also saw ministers discuss the implications of the speaker's statement.

While the pound reacted badly to Bercow’s scuttling of a third meaningful vote, analysts at Rabobank said the ruling did not represent the cliff edge moment that market had initially assumed.

"Instead, the PM’s hands are tied to the point that an extension, and perhaps a longer than expected extension, now seems more likely than the UK crashing out of the EU in an unexpected cliff-edge moment," Rabobank said. "Not being able to bring the same motion back to the table for eventual agreement rather suggests that the PM will be forced to seek an even longer extension, perhaps 12-24 months in length."

Despite some earlier oscillations, the pound was little moved on Tuesday afternoon, flat against the dollar at 1.3259 and down 0.1% versus the euro at 1.1684.

While sterling is seen as key gauge of financial markets' confidence about Brexit, currency traders are having a tough time judging the implications of many political rulings and machinations.

Some banks are advising clients to keep their powder dry.

UBS on Monday advises hedging downside risks, saying "The outlook for Brexit is extremely fluid, which makes it difficult to have a strong conviction on the next steps. If the UK is to leave the EU, the path of least resistance points to the Withdrawal Agreement being in place. A disruptive no-deal exit remains a possibility but a delay to Brexit is likely to emerge beforehand."