LONDON (Reuters) - The British currency rose off three-week lows against the dollar on Tuesday as Prime Minister Theresa May said the government would seek to speed up ratification of its Brexit withdrawal deal with the European Union if time gets too tight.
Time is running out for May to persuade the EU to amend the Brexit deal and then get British lawmakers to approve it, before Britain is scheduled to leave the bloc on March 29.
Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv
The deadlock and delays over the terms of Brexit have heightened fears among financial investors of a no-deal and disorderly, economically disruptive departure even if the majority of British lawmakers want to avoid one.
May told lawmakers on Tuesday to hold their nerve over Brexit and give her more time to negotiate a deal acceptable to both the European Union and the British parliament.
She also said that parliament, which last month resoundingly rejected her accord for satisfying neither pro-Brexit MPs’ wish for a clean break nor pro-EU lawmakers’ call for continued close ties, would not vote on a revised deal this week.
British media have reported a fresh vote is not expected until late February at the earliest.
“Further delay is unlikely to be welcomed by business. However the prime minister appears determined to push her deal to the wire, given the lack of a parliamentary majority for any other options,” said Michael Hewson, analyst at CMC Markets.
“This continued brinkmanship has seen the pound slip to a three-week low against the U.S. dollar.”
The pound rose 0.2 percent to $1.2876, its weakest since Jan. 21.
Versus the euro, sterling held its own and was unchanged on the day at 87.695 pence per euro.
Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh
Analysts noted that the price of buying options to protect against further volatility in the pound had fallen in recent days. But they said that the move lower followed a period in which investor demand for protection against wild price swings as the Brexit date approaches has been strong.
“The recent bigger picture is still that market participants are actively pursuing downside protection,” said Lee Hardman, currencies analyst at MUFG said.
He said that sterling markets remained relatively calm, with the spot price reflecting more confidence that Britain would avoid a chaotic exit from the EU. But as the clock ticks down, that optimism is likely to fade, Hardman noted.
Britain’s economy is also suffering from Brexit-related uncertainty - it grew last year grew at its slowest rate since 2012, data showed.
“It is very difficult to argue with the notion that Brexit related uncertainty has now had a significant economic impact,” Rabobank analysts said in a note.
Reporting by Tommy Wilkes; Editing by Mark Heinrich