MPs Vote To Reject No-Deal Brexit, Sterling Soars

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The pound has experienced a sharp increase as British MPs voted to rule out a no-deal Brexit, on yet another day of volatile currency trading.

The sterling rose by more than two cents against the US dollar to $1.33 and was almost two cents up versus the euro to more than €1.17.

The rise comes was after an amendment that rejects a no-deal Brexit in all circumstances was narrowly voted by the Commons.

The currency had already made massive gains in the run-up to the vote. It has wildly swung over the last couple of days.

There was a broad welcome for the outcome from business groups, however, it was combined with continued frustration regarding the lack of uncertainty about the way forward for the process.

The interim director general of the Institute of Directors, Edwin Morgan, stated: “Parliament has clearly spoken, but for this to be more than just words, MPs now need to agree on what they want in place of no-deal.”

He added: “If they vote for an extension tomorrow there will still be the considerable task of convincing the EU that there is an exit deal the House of Commons can get behind.”

The chief executive of TheCityUK, Miles Celic, stated: “MPs have said ‘no to no deal,’ but without an agreement between the UK and the EU, this vote sadly delivers very little.”

He added: “A constructive and practical way forward must be found.”

Celic noted: “Unless the withdrawal agreement or some other realistic course of action is agreed very soon, the UK will still crash out, regardless of MPs’ wishes.”

Business anxiety has reflected days of high drama over Brexit in Westminster while the currency markets have sharply fluctuated.

Earlier in the week, Sterling had reached a 22-month high against the euro when Theresa May, the Prime Minister of the United Kingdom, secured a revised transition deal with the European Union before slumping back again when it proved to be too little to win over parliamentary opposition.

The crushing Commons defeat of PM May last Tuesday paved the way for a vote on Wednesday that saw the MPs turn down a “no deal” Brexit. It was perceived to be likely to create major economic uncertainty.

A further vote on a delay of Brexit is scheduled to take place on Thursday.

Investors view this as positive for the pound as it could improve the chance of the Prime Minister of securing a deal or even result in a second referendum.

A market analyst at Forex.com, Fawad Razaqzda, stated: “The potential delay of Brexit is what is helping to hold up the pound, but by the same token, the uncertainty is limiting its upside potential.”