Pound under pressure ahead of Brexit delay vote

Lianna Brinded
Photo: Reuters
Photo: Reuters

The pound against the US dollar (GBPUSD=X) is under pressure ahead of the third vote in parliament related to Brexit.

Sterling against the dollar erased some of the solid gains it made in the immediate aftermath of parliament voting to reject leaving the European Union without a withdrawal agreement last night (13 March), falling to below the $1.32 level.

Chart: Yahoo Finance
Chart: Yahoo Finance

Last night, Members of Parliament (MPs) voted by 312 to 308 to reject a no-deal Brexit, which sent the pound soaring to over 2%. However, the vote is not a legally-binding and there is still a distinct possibility that Britain could end up with a no-deal Brexit.

Since politicians voted against Britain leaving the EU without a deal, this means MPs will have to discuss and vote this evening on whether Brexit needs to be delayed in order to secure a new deal. This would require extending Article 50 — the notification that Britain is leaving the EU.

A no-deal Brexit means that the UK will leave the bloc on 29 March without any rules of regulations to replace those that were implemented during the EU membership. That is the worst case scenario for the economy because no one will know how to operate in the vacuum of no distinct rules and regulations governing trade or immigration.