Pound soars after Boris Johnson suffers historic defeat over no-deal Brexit

'Markets see a Boris Johnson-led no-deal Brexit as the worst-case scenario,' analyst says

House of Commons votes 328 to 301 to approve the emergency debate motion on European Union

The pound rebounded as parliament voted through a motion paving the way for legislation to block a no-deal Brexit.

Sterling continued to climb against the dollar following a dramatic evening in Westminster, reaching $1.2141 on Wednesday morning a day after hitting a three-year low.

The currency had plunged to $1.1971, its weakest value since 1985 if October 2016’s flash crash is discounted, ahead of Boris Johnson’s showdown with MPs on Tuesday and amid speculation of a snap election.

The rebound began when the prime minister lost his Commons majority as Tory MP Phillip Lee crossed the floor to join the Liberal Democrats.

“For all the uncertainty that lies ahead, markets see a Boris Johnson led no-deal Brexit as the worst-case scenario and thus treat anything that undermines that as pound positive,” said Joshua Mahony, an analyst at IG.

Bipan Rai, of the Canadian Imperial Bank of Commerce, said: “There’s still a few hurdles to clear, but the risks to Brexit are slightly more two-sided now.

“We’re not ready to say that a no-deal Brexit is out of the picture, but a squeeze could see momentum build for a constructive pound in the next few sessions.”

Tuesday evening’s vote means MPs can seize control of the Commons agenda on Wednesday afternoon to force through a bill requiring the prime minister to request an extension in Brexit talks to 31 January unless he secures a deal with Brussels or parliamentary approval for no deal by 19 October.

A Bloomberg survey last month found a delay was one of the most positive outcomes for the pound, and could push it up to $1.26. Sterling has tumbled almost 19 per cent since the EU referendum in June 2016.

The government’s defeat by a margin of 328 to 301 on Tuesday leaves Mr Johnson’s Brexit strategy in tatters by potentially robbing him of the threat of no-deal, which he has repeatedly said is essential to obtain concessions from the EU.

Responding from the despatch box immediately after the result, the prime minister said he would table a bill to trigger a general election, with a vote expected to take place soon after the anti-no deal bill completes its passage through the Commons on Wednesday.

But Mr Johnson’s plans seemed doomed to failure after Labour said it would not back his election motion, which requires a two-thirds majority and is therefore dependent on opposition support to pass through the Commons, until the legislation to stop no-deal is passed.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

By clicking ‘Create my account’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in