The Pound sinks after the Parliament vote on May’s Brexit 'Plan B'
The Pound experienced another nightmare night on January 29, sinking against the US dollar and the euro, during the debate of the British Parliament on 'Plan B' submitted by Prime Minister Theresa May, after the rejection of her 'Plan A' agreed with the European Union at the end of November. Investors have begun massively to sell the British currency as the sequence of amendment votes hinted how the Parliament would have given the green light to the possibility of modifying the Brexit agreement.
The Pound collapsed just after the outcome of the vote on the amendment submitted by the Labour MP Yvette Cooper, the one intended to discuss an extension to the official Brexit date (March 29). The rejection of the amendment was not a foregone conclusion, since many financial operators had begun to bet, in recent days, on a possible agreement between majority and opposition to lengthen the date, in an attempt to rewrite another agreement. The rejection, according to many analysts, increases the risks of a no-deal, despite the Parliament has expressed itself contrary to this option.
Finally, British MPs voted in favor of the possibility of modifying the backstop mechanism that regulates the Northern Irish border. Immediately after the vote, a spokesman for the European Commission said that Europe is ready to discuss an extension to the official date but not to renegotiate the terms of the agreement, including the backstop mechanism.
The Pound has thus fallen up to 1.3058 against the dollar, 141 pips below the day’s high (1.3199) and up to 1.1419 against the euro, 134 pips below the day’s high (1.1553 ). On the ground, the British currency eventually left around -0.70% against both currencies. Yesterday, Theresa May spoke with the leader of the Labour Party, Jeremy Corbyn, while EU top officials rejected again any proposal to sit around the table in order to renegotiate the agreement. The Sterling slightly rose against the euro and the dollar, but it did not entirely cover the previous day’s losses.