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Brexit: sterling calms but nerves don't after key parliamentary vote

Credit: Reuters Studio
Published on January 30, 2019 - Duration: 01:45s

Brexit: sterling calms but nerves don't after key parliamentary vote

After a sharp fall on Tuesday's key UK parliamentary vote on Brexit, sterling rose again on Wednesday.

But, as David Pollard reports, investors are deeply anxious over whether the UK can avoid crashing out of the EU without a withdrawal deal on March 29.

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Brexit: sterling calms but nerves don't after key parliamentary vote

Testing times for UK politicians.

Testing times for UK markets as traders hang on for a rollercoaster ride in sterling.

Tuesday night saw the pound tumble 0.7 per cent against the dollar when lawmakers voted to demand Prime Minister Theresa May renegotiate the terms of Brexit.

Wednesday morning saw it bounce by a third of a percent as investors bet the government would still avoid exiting the EU without a withdrawal deal.

(SOUNDBITE) (English) CMC MARKETS CHIEF MARKET ANALYST, MICHAEL HEWSON, SAYING: "The big question is, and the EU have already said they're not going to reopen the withdrawal agreement, is whether or not the EU will accept any renegotiation of the treaty or the agreement.

And I think that is the big problem, the market is going to struggle to square that particular circle." And 'non' to renegotiation has been the line from French President Emmanuel Macron, European Parliament Brexit Negotiator Guy Verhofstadt, and the EU's chief Brexit negotiator, Michel Barnier.

(SOUNDBITE) (English) EUROPEAN UNION CHIEF BREXIT NEGOTIATOR, MICHEL BARNIER, SAYING: "The EU institutions remain united and we stand by the agreement we have negotiated with the UK." Which leaves analysts scratching their heads over what happens next.

(SOUNDBITE) (English) CMC MARKETS CHIEF MARKET ANALYST, MICHAEL HEWSON, SAYING: "That's what markets are now focusing on, who is going to blink first, as we head in to the middle of February and another meaningful vote." Another key Brexit vote pencilled for the UK parliament on February 13.

By then, lawmakers should know whether the EU is ready to make concessions or whether Theresa May is on course to lose what backing she won in parliament on Tuesday.

In the meantime, there are some temporary winners.

UK stocks, exporter heavy and boosted by weaker sterling, were up over a percent on Wednesday morning.

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