Sterling dropped back from a six-month high against the dollar this afternoon after House of Commons speaker John Bercow refused to let the government put its deal to parliament for the second time in three days.
The pound opened around 0.6 per cent lower against the dollar after the parliamentary vote on Prime Minister Boris Johnson’s new Brexit deal was delayed on Saturday. Yet it surged this morning past the $1.30 level not reached since May, before retreating somewhat.
At around 1.30pm, sterling rose once again to a new near-six month high of $1.3013. The rise came after the Democratic Unionist Party (DUP) said it would not try to amend the Brexit deal, which could have frustrated its passage. It then slipped back slightly.
Sterling dropped further, to around $1.298 by 4.30pm, after Bercow rejected the government’s request for a meaningful vote on the Brexit deal this afternoon. He dismissed arguments that the situation has changed now Johnson has sent a Brexit delay letter to the EU as “not persuasive”.
The deal was originally slated to go before parliament on Saturday. The vote was pulled at the last moment, however, after an amendment by Sir Oliver Letwin allowed MPs to withhold their approval until all other Brexit legislation is passed.
Michael Brown, senior analyst at foreign exchange company Caxton, said that “attention will shift towards tomorrow’s vote on the second reading of the Withdrawal Agreement Bill”. This is the legislation that would implement the deal in the UK.
“Such a vote, if passed unamended, would pave the way towards an orderly Brexit, and should see the pound continue to press higher.”
‘Massive week’ for the pound
Neil Wilson, chief analyst at Markets.com, said: “It’s a massive week for the pound and for Brexit.”
The PM suffered a major setback on Saturday and was forced to send a letter to Brussels asking for an extension, something he said he would never do.
Johnson left it unsigned, however, and sent another signed letter making clear to the European Union his distaste of a further delay.
“The pound’s price action and resilience in the face of the defeat for the PM on Saturday shows the market remains constructive on a deal being agreed, whether it’s now or sometime in the coming weeks.”
Connor Campbell, analyst at Spreadex, added: “Settling in for another long, nervy week of Brexit drama, the pound managed to start trading in a relatively composed fashion.”
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Michael Hewson, chief market analyst at CMC Markets, said sterling’s overnight slip and subsequent recovery was helped by expectations that a Brexit deal will pass this week.
(Image credit: Getty)