British Pound Drops After Lawmakers Vote on Brexit Deal Amendments

2019-1-29 16:19 | By : Mex Group News

The British pound fell on Tuesday afternoon, after the U.K. Parliament rejected a host of amendments to the Brexit deal. Lawmakers, however, ruled out a hard Brexit scenario and passed an amendment to replace the Irish backstop proposal with an alternative.
 
Prime Minister Theresa May, whose initial deal was rejected earlier this month, will now return to Brussels to try to obtain legally binding changes to the existing agreement. May acknowledged that renegotiating wouldn't be an easy task when she addressed Parliament following the votes. The European Union previously said that a renegotiation of the deal May secured was not an option.
 
Meanwhile, passing the no-deal amendment supports market expectations that a scenario in which the U.K. would crash out of the EU without an agreement with Brussels in place was the least likely.
 
“The EU has been clear that they will not support the Brady [amendment that would change the Irish backstop proposal] and the only progress that was made is that the prime minister now needs to pack her bags and go to renegotiate a new deal with Brussels,” said Edward Moya, senior market analyst at Oanda.
 
Yet, after an amendment proposing to extend the Brexit timeline if no new agreement was reached by late February was rejected, the British pound dropped against the U.S. dollar and the euro and failed to recover.
 
Sterling US:GBPUSD was last weaker at $1.3074, compared with $1.3157 late Monday. The euro US:EURGBP was up 0.7% versus the pound at £0.8747.
 
Meanwhile, some pro-leave and pro-remain politicians in May's Conservative Party have agreed to a secret Brexit compromise — coined the Malthouse compromise or Plan C — to ensure an orderly Brexit and reunite their party.
 
Meanwhile, other major currencies, like the U.S. dollar, the euro and the Japanese yen traded in tight ranges, with little on the economic calendar ahead of the conclusion Wednesday of a Federal Reserve policy meeting and Chinese economic data.
 
U.S. consumer sentiment for January fell to an 18-month low amid the partial government shutdown that lasted for much of the month.
The ICE U.S. Dollar Index US:DXY was 0.1% stronger at 95.828 while the euro US:EURUSD was 0.1% stronger at $1.1435.
 
The dollar was little changed against the Japanese yen US:USDJPY fetching ¥109.35.
 
Source: marketwatch.com