Pound wobbles after May's Brexit deal is rejected again

English Brexit clock
English Brexit clock

The pound fluctuated against both the dollar and euro after the United Kingdom parliament rejected Theresa May’s revised Brexit deal by a vote of 391 votes to 242.

The move follows wild trading sessions over the last two days. With the deal all but dead, Parliament will probably vote to postpone Brexit later this week.

United Kingdom Prime Minister Theresa May’s Brexit deal was rejected once again by Parliament, throwing the country deeper into political crisis and raising the prospect that the divorce will be delayed or even reversed.

May’s deal -- renegotiated late on Monday night -- was defeated by 391 votes to 242. That was less than the record 230-vote margin she suffered in January, but still a resounding repudiation of two years of painstaking work. The pound held onto earlier losses.

With the deal all but dead, Parliament will probably vote to postpone Brexit later this week, and lawmakers -- including some of May’s own Cabinet -- will maneuver to force the government to rip up its Brexit plans and start again.

Members of Parliament are expected to move on Wednesday to take the chaotic no-deal option off the table -- but there’s a risk all they manage to do is postpone the drama for another few months.

Brexit United Kingdom

May’s job, which she has clung to through one crisis after another, is now in greater peril than ever.

May herself has said that if her deal was rejected, Parliament would force the U.K. to maintain closer ties with the bloc in a betrayal of the referendum result of 2016.

She’s also warned of the risk that the divorce would be stopped altogether. Campaigners are pushing for a second referendum and could use an extension to the exit day to push for one.

The prime minister wielded the threat of Brexit being blocked to try to get hardline Brexit backers to support her deal. But in the end it wasn’t enough. They object to her deal more than they fear a rerun of the referendum.

That’s because they see a risk that the agreement will keep the UK chained to EU rules forever, and consider that even worse than membership.

Dashed hopes

May was sent back to Brussels to renegotiate the deal and while she didn’t come back with what she wanted, she did secure some key tweaks.

But hopes they would swing skeptical lawmakers behind her were quickly dashed. First, Attorney General Geoffrey Cox issued new legal advice warning that the risks hadn’t changed for the UK.

Then the pro-Brexit European Research Group of Tories urged Conservatives not to support May’s new exit agreement, and the Democratic Unionist Party, which props up May’s minority Tory government, also criticized it.

With just 17 days left until the UK’s scheduled departure date, talks have been stuck on the same issue that has blocked progress for the past year: the backup plan intended to ensure there’s never any need for customs checks at the land border between Ireland and the U.K.

Pro-Brexit politicians in May’s Tory party insist that the plan -- known as the backstop -- threatens to trap the U.K. inside the EU’s trade regime forever, because it would be impossible for Britain to leave.

In his legal advice on the revised deal, Cox said the risk of this has been reduced, but not eliminated.

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