Pound rises after May's Brexit deal rejected

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Europe

The British pound rallied Tuesday after British lawmakers voted down Prime Minister Theresa May’s deal to leave the European Union by a crushing margin.

The pound's surge after the lopsided vote suggested traders still viewed a so-called "hard Brexit" as a remote possibility, which means one with no agreement between the EU and Britain.

The pound, which was down as much as 1.2 percent before the outcome of the vote, rebounding sharply to stand down 0.1 percent on the day at 1.286 U.S. dollars.

Against the euro, the pound was up half a percent at 88.7 pence.

Parliament voted 432 to 202 against May's deal, one of the biggest defeats ever suffered by a British prime minister.

The negative vote had been expected but the margin was much bigger than May had hoped. Ahead of the vote, some analysts had predicted the pound could plunge with a one-sided defeat, such as 200 votes or more.

BK Asset Management's Boris Schlossberg said investors simply did not believe there was a realistic chance of a so-called "hard" Brexit.

"Markets project beliefs and the underlying belief is that nobody's going to be committing economic suicide," he said.

Jeremy Stretch, head of Group-of-10 currency strategy at Canadian Imperial Bank of Commerce, told Bloomberg the outcome boosted the odds of a delay, a second referendum or even no Brexit at all.

Source(s): AFP