The pound is clawing back ground in early trade after tumbling during the Brexit vote in Parliament. The rejection of the Cooper amendment, which would have given Parliament the tools to delay Brexit, brought sterling tumbling back to earth. The pound has rallied over recent weeks, hitting an 11-week high versus the dollar on the hope that the UK will avoid a no deal Brexit. Whilst Parliament voted in favour of the Caroline Spelman amendment to block a no deal Brexit, the rejection of the Cooper amendment means that without a Brexit deal, the UK is still on course to crash out of the EU on March 29.
Instead Parliament voted to send Theresa May back to Brussels on a mission to negotiate new arrangements to replace the contentious Irish backstop part of the Brexit deal. Given that the EU are steadfast in their position that there is no more negotiating to be done, Theresa May’s mission is looking rather futile. She has two weeks to make progress before reporting back to Parliament.
After falling sharply during the voting yesterday, the pound is picking up, as it once again takes an optimistic view. The reality is the UK government continues to walk and talk in circles around Brexit providing little clarity for businesses as the deadline fast approaches. Still, it would appear the market is steadfast in the belief that a no deal will be avoided. As a result, the pound is climbing higher targeting $1.31.