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Pound rises after ‘meaningful’ Brexit vote

The pound has risen after MPs voted to reject Theresa May’s Brexit deal by 230 votes.

The vote opens up a range of outcomes, including no deal, a renegotiation of Mrs May’s deal, or a second referendum.

Sterling rose 0.05% to $1.287 after declines of more than 1% earlier in the day.

The currency slumped 7% in 2018 reflecting uncertainty about the terms of the UK’s exit from the European Union.

MPs voted by 432 votes to 202 to reject the deal, the heaviest defeat for a sitting government in history.

“A defeat has been broadly anticipated in markets since the agreement with the EU was closed in November 2018 and caused several members of the government to resign,” said Richard Falkenhall, senior FX strategist at SEB.

But business groups said their members’ patience was wearing thin.

“There are no more words to describe the frustration, impatience, and growing anger amongst business after two and a half years on a high-stakes political rollercoaster ride that shows no sign of stopping,” said Adam Marshall, director general of the British Chambers of Commerce.

He implored MPs to come to an agreement, and was joined in this plea by business groups including the Federation of Small Businesses, the Institute of Directors and the Confederation of British Industry.

Some investors see the chances of a no-deal Brexit diminishing as parliament exerts more authority over the process.

“The probability of a no deal has diminished while the chances of a delay in Article 50, a second referendum or even, at the margin, no Brexit at all, have all increased. The consequence of those scenarios has encouraged sterling to rally despite the PM suffering the worst parliamentary result in a century,” said Jeremy Stretch of CIBC Capital Markets.

On Friday, hedge fund manager Crispin Odey, a major donor to the Brexit campaign, said he now expected the project to be abandoned altogether and that he is positioning for the pound to strengthen.