Sterling plunged to as low as €1.1422 last night having soared past the €1.15-mark earlier in the day. Against the US dollar, the pound fell from $1.3163 to $1.3080 after the Brexit vote, having already lost ground from three-month highs of $1.3218 touched on Friday. The pound is attempting to stage a recovery today and was trading at €1.1436 against the euro at 8:30AM UK time. Sterling is currently worth $1.3072 at the same time of trade, having dropped slightly from $1.3097.
The pound was left shaken after a dramatic night of votes in the Commons.
After a day of debate concerning different amendments to the Withdrawal Agreement originally proposed by Prime Minister Theresa May, MPs supported a new approach to reopen the agreement and replace the backstop with “alternative arrangements”.
But the Conservative leader was immediately turned down by Brussels, where European Council president Donald Tusk insisted that the Withdrawal Agreement struck last November was not open for renegotiation.
Mr Tusk’s spokesman said: “The Withdrawal Agreement is and remains the best and only way to ensure an orderly withdrawal of the UK from the European Union.
“The backstop is part of the Withdrawal Agreement, and the Withdrawal Agreement is not open for re-negotiation.”
The Commons voted by 317 to 301 in favour of the backstop changes – which Mrs May said showed there was a means of securing a “substantial and sustainable majority in this House for leaving the EU with a deal”.
The vote is not legally binding on the Government but will impose massive political pressure on the Prime Minister to delay Brexit from its scheduled date of March 29 if she cannot secure a new deal from Brussels.
Yukio Ishizuki, senior currency strategist at Daiwa Securities, said: “It is difficult to tell what’s next for the pound.
“But the March 29 Brexit deadline will likely be extended, and the focal point is on when and how such an extension is decided upon.
“For now focus shifts back to key events with more consequences for the dollar, such as the FOMC (Federal Open Market Committee) meeting, US-China trade talks and US jobs report.”
Ian Strafford-Taylor, CEO of currency expert FairFX, explained the pound is now 12 percent down compared to the day of the Brexit referendum but 4 percent up compared to the start of the year.
He added: “Despite last night’s vote, we are no closer to a long-term solution and the UK is no clearer on how Brexit will play out and exactly what it will mean for currency.
“Analysts will be keeping an eagle eye on the Brexit process and how it unfolds over the coming days, weeks and months.
“Holidaymakers looking to get the best value for their holiday money should be staying alert to political events too.”
John Goldie, FX Dealer at Argentex, said: “Regardless of the future twists and turns, it’s clear now that the market got ahead of itself taking the pound to levels not bettered against the euro for almost two years.
“Sterling’s strength may be justified if a delay, or softened Brexit is achieved, but for now the uncertainty quite clearly remains, and with it the spectre of No Deal looms closer by the day.”