The pound fell sharply on the foreign exchanges after MPs voted in favour of re-opening talks with Brussels
The pound fell sharply on the foreign exchanges after MPs failed to seize control of the Brexit negotiations from Theresa May in order to rule out a no-deal departure from the EU.
Sterling dropped by more than a cent against the US dollar to its lowest point of the day after a series of votes in the House of Commons were seen as increasing the prospect of Britain leaving without an agreement on 29 March.
The pound has been rising steadily on the currency markets since MPs voted by a majority of 230 to reject the withdrawal agreement negotiated between London and Brussels but, after trading at about $1.32 earlier in the day, sterling fell to $1.3088 against the dollar when MPs passed Graham Brady’s amendment giving the prime minister scope to restart negotiations with the EU.
The Brexit deadline of 29 March as a cliff-edge event has disappointed many in the market who were betting on a sterling recovery, said Jeremy Thomson-Cook, WorldFirst head of FX strategy.
David Cheetham, an analyst at XTB online trading, said that on the one hand, the outcome represents a victory for the government, in defeating the [Yvette] Cooper amendment and seemingly uniting her party with the vote in favour of the Brady motion, but really it leaves the UK no closer to a deal which is acceptable both by parliament and the EU.
David said the past fortnight’s trade has been characterised by a steady appreciation in the pound, which was largely due to a growing consensus who believe that the chances of a no-deal were rapidly diminishing, but this narrative is now being challenged a little more.
The pound bounced around the same mark in overnight trading and was at $1.309 at 5.30am GMT.
The FTSE100 was up 0.7% on Wednesday morning, however, as the falling pound is good news for the index’s large number of multinational companies, which report profits in US dollars.