- Markets Insider
- British pound fights back against the dollar after MPs reject Brexit deal.
- Prime Minister Theresa May’s deal was rejected by a margin of more than 200 votes, the biggest defeat in parliamentary history.
- Opposition leader Jeremy Corbyn has now tabled a motion of no-confidence in the government.
- Prior to the vote the pound was down as much as 1.5%, but since the vote it has bounced back.
- Follow the pound’s movements live at Markets Insider.
- Business Insider has live coverage of the crucial vote, follow it here.
The British pound is fighting back Tuesday evening after Prime Minister Theresa May suffered a record breaking defeat over her Brexit deal in the House of Commons.
Immediately after the vote the pound was lower by as much as 1.5% against the dollar, trading below the $1.27 mark. However, in the minutes after the vote, the pound has bounced back, and as of 8.25 p.m. GMT (3.25 p.m. EST) is narrowly in positive territory.
The rally seemingly reflects expectations that a no deal Brexit is now less likely than before, a positive for investors.
“Markets are firmly focused on the risks of a no deal and/or a potential general election. Though the former isn’t out of the question, the danger of such an outcome seems to have diminished in recent weeks, given Parliament has expressed its desire to avoid it,” Dean Turner, UK Economist at UBS Global Wealth Management said in an email.
“The lack of immediate downside in sterling supports this view.”
May was widely expected to suffer a crushing, and that defeat came to pass, with MPs voting 432-202 against the Withdrawal Agreement.
Labour party leader Jeremy Corbyn has now tabled a motion of no-confidence in the government, which will be voted on on Wednesday.
Richard Falkenhäll, senior FX strategist at Swedish bank SEB believes the pound could actually rally in the coming days, if it appears the UK is moving towards delaying or cancelling Brexit.
“From a GBP perspective, any alternative going forward that increases the likelihood that the UK in fact stays a member of the EU, like a referendum on the government agreement or even a new election demanding an extension of the withdrawal period, is therefore likely to be supportive for the GBP,” he wrote in an email in the hour before the vote.
“Although uncertainty is bad for the economy and bad for financial markets, in this case uncertainty may in fact be a positive factor for the British currency as it increases the likelihood the UK will remain an EU-member.”