The Pound has made gains vs the US Dollar overnight even though Theresa May lost the vote on the current Brexit deal by a majority of 230.
With only 202 voting in favour of the Brexit deal and 432 voting against the withdrawal agreement this is the largest defeat for a government since 1924.
The leader of the opposition Jeremy Corbyn has moved for a vote of no confidence in government and this will be put forward for debate today.
One concerning issue for Theresa May is that a total of 118 Tories voted against her plans. Although, as proved when the recent vote of no confidence occurred, Theresa May passed the test with flying colours, so I would expect the same result to happen once again.
Clearly MPs cannot come to an agreement with the current Brexit deal on offer but Tories and the DUP will stick together and have claimed that Labour are just using the opportunity to aim for a general election rather than coming up with an alternative deal.
Why has the Pound gained vs the US Dollar?
The reason why we have seen the Pound make gains across the board including vs the US Dollar is that the chances of a Brexit taking place by 29th March now appear to be getting less likely and this is why the market has stabilised in Sterling’s favour overnight.
Clearly, there is still a lot to be debated and with Theresa May due to provide the ‘Plan B’ on Monday I cannot see why this will be voted through compared to last night’s result.
The European Court of Justice has said on a number of occasions that the UK can revoke Article 50 any time up until the end of March. If we head towards a ‘no deal’ Brexit this could provide the UK with the opportunity to either revoke Article 50 or more likely delay the talks in order to try and find a resolution.
Pound vs US Dollar rates: What’s next?
In the short term I think the Pound could move above 1.29 but struggle to break towards 1.30 and above, unless we have some negative news from the US.
Later on today the US will release both Import and Export data as well as Jobless Claims tomorrow so this is likely to set the tone for Pound vs US Dollar exchange rates towards the end of the week.
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