Pound sterling falls after MPs vote down Brexit amendments aimed at stopping no-deal

Adam Forrest
Pound sterling falls after MPs vote down Brexit amendments aimed at stopping no-deal
Pound sterling falls after MPs vote down Brexit amendments aimed at stopping no-deal

The pound fell against the euro and the dollar after MPs voted down a series of Brexit amendments aimed at preventing a no-deal scenario.

Sterling was down 0.7 per cent at a three-day low of $1.3057. It also sank 0.8 percent to 87.56 pence per euro, the day’s low.

Growing expectations that Britain might be able to avoid a no-deal Brexit had fuelled a rally in the pound this month against the euro and the dollar. But the currency edged down as politicians prepared to vote in the House of Commons, and slid sharply after Labour MP Yvette Cooper’s amendment failed to win enough votes.

Markets were focused on Amendment B, proposed by Ms Cooper, which sought to shift control from the government to Parliament and postpone to the Brexit process.

If successful, it could have given lawmakers who want to block or renegotiate Brexit a legal route to do so. But it was defeated by 321 votes to 298.

Amendment G by Dominic Grieve, the pro-EU Conservative MP, which would have given lawmakers a chance to propose their own Brexit debates in Parliament, was also voted down, with 321 votes against and only 301 votes in favour.

Labour MP Rachel Reeves’ amendment, which would have required the government to extend Article 50 without a deal before 26 February, was also defeated.

But an amendment by Conservative MP Caroline Spelman and Labour MP Jack Dromey did pass, 318 votes to 310. It was a non-binding call on the government to rule out leaving without a deal.

MPs also in favour of a proposal which calls on the government to replace the so-called Northern Irish backstop with alternative arrangements. The amendment, put forward by influential Conservative lawmaker Graham Brady, won 317 votes to 301.

Prime Minister Theresa May hopes it will strengthen her hand when she returns to Brussels to try to renegotiate the Brexit deal.

“We are looking again at the Brexit deadline of March 29 as a cliff-edge event... That disappointed many betting on a sterling recovery,” said WorldFirst head of FX strategy Jeremy Cook on Tuesday’s evening fall.

Speaker Bercow’s announcement that seven amendments had been chosen for voting sent sterling to a session high of $1.32 earlier on Tuesday. But prior to the votes that gone under way at 7pm, sterling was down 0.2 percent versus the dollar at $1.3135. It also fell 0.2 percent against the euro.

The pound remained below a three-and-a-half month high of $1.3218 on Tuesday. A spike in volatility in derivatives market reflected nervousness about the likely outcome of tonight’s votes.

Earlier this month leading bank Citigroup advised its clients to stop trading the pound in the run-up to a vote on Ms May’s Brexit deal because of the volatility around the widely-predicted defeat.

The bank warned high net worth clients to avoid trading sterling in the short term because of the huge swings likely as uncertainty over the process drags on.

Additional reporting by agencies