Pound sinks after MPs reject extension to Article 50

By Lukman Otunuga, Research Analyst

Buying sentiment towards the British Pound sharply deteriorated last night after parliament rejected the Cooper amendment.

This amendment was seen ruling out a no-deal Brexit by giving the government an opportunity to extend the official deadline if no deal was reached. Concerns over a no-deal outcome possibly materializing encouraged investors to offload the British Pound.

Although the Spelman amendment was passed, this did little to help the Pound based on the fact that it was not legally binding. While the house also passed the Brady amendment which entails replacing the Irish backstock with unspecified “alternative arrangements”, the EU has stated that Withdrawal Agreement is ‘not open for re-negotiation’.

Sterling is likely to trend lower in the near term as investors digest the outcome of this evening’s parliamentary vote. In regards to the technical picture, the GBPUSD is seen testing 1.3000 if a daily close below 1.3070 is achieved.

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