The British pound started strongly on Thursday morning as traders reacted to the Government’s latest defeat over its Brexit plans.
Currency traders had pushed sterling up from $1.30 at the start of the week to over $1.33 this morning as the prospect of a no-deal Brexit was averted, opening up the possibility of an extended withdrawal period from the EU, a General Election or even a second referendum. However, the currency then went into an abrupt reversal as the morning progressed.
Yesterday’s Spring Statement was effectively a rallying cry by the Chancellor to get behind the Prime Minister’s Brexit plans and avoid the economic disruption of a “disorderly Brexit”. Philip Hammond promised a multi-billion pound “Brexit dividend” of public spending if the Government’s plans go through.
MPs are set to vote on whether to keep Britain in the EU longer than planned after UK Prime Minister Theresa May’s authority over Brexit sustained another major blow.
The vote on extending Article 50 comes after MPs defied the government and dramatically decided to rule out a no-deal withdrawal from the EU in scenes some Tory Brexiteers described as “chaotic”.
After the 149-vote rejection of her Withdrawal Agreement on Tuesday, May suffered a second defeat in as many days when MPs backed the cross-party amendment rejecting a no-deal Brexit under any circumstances.
In a surprise move, the Commons voted 312 to 308 – a majority of four – in favour of the proposal tabled by former Conservative Party chairman Dame Caroline Spelman.
The vote was later confirmed by a more emphatic 321 votes to 278, overriding a government motion that would have rejected no-deal on the scheduled date of March 29 but left it on the table for other times.
After the defeat, May made it clear that she intends to put a third “meaningful vote” on her Brexit deal to the Commons within days.
Following the Commons move on no deal, the government put down a motion for debate on Thursday that offers to seek a one-off extension of Article 50, delaying the scheduled Brexit date of March 29 to June 30 if MPs approve the deal negotiated with the EU by next Wednesday.
However, the PM warned if the deal – which has already been twice rejected by overwhelming majorities – is not approved, a longer extension will be needed, requiring Britain to take part in the European Parliament elections in May.
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