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Pound jumps as MPs vote to reject no-deal Brexit

The pound has jumped as MPs voted to rule out a no-deal Brexit, on another day of volatile currency trading.

Sterling climbed by as much as three cents against the US dollar to nearly $ 1.34, a nine-month high, and was two cents up versus the euro to as high as €1.18 – a new 22-month peak.

That was after an amendment rejecting a no-deal Brexit in all circumstances was narrowly backed by the Commons.

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

There was a broad welcome for the result from business groups but it was combined with continued frustration about the lack of a clear way forward for the process.

Edwin Morgan, interim director general of the Institute of Directors, said: “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.

“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.”

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

“A constructive and practical way forward must be found.

“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 mirrored days of high drama over Brexit in Westminster while currency markets have see-sawed sharply.

Sterling had hit a previous 22-month high against the euro earlier in the week when Theresa May secured a revised transition deal with the European Union before falling back again when it proved too little to win over parliamentary opposition.

Mrs May’s crushing Commons defeat on Tuesday paved the way for a vote on Wednesday that saw MPs reject a “no deal” Brexit seen as likely to create major economic uncertainty.

A further vote on delaying Brexit will take place on Thursday.

Investors see this as positive for the pound as it could increase the Prime Minister’s chance of securing a deal or even lead towards a second referendum.

David Cheetham, chief market analyst at xtb online trading, said: “It appears that hardline Tories are now starting to fear that the game is up and are looking to change tack and throw their weight behind the PM.

“There is significant scope for a sizeable relief rally in the pound, with the path of least resistance for sterling now appearing to be higher – albeit with several potential potholes still lining the way.”

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