Pound wobbles after May's deal defeated
The pound steadied but remained on the backfoot following a volatile session in the House of Commons.
It's after MPs defeated Prime Minister Theresa May's Brexit divorce deal by a crushing margin.
Parliament on Tuesday voted 432-202 against May's deal, the worst parliamentary defeat for a government in recent British history.
Investors' short-term focus is now on a confidence vote on May's government by lawmakers later in the day.
Sterling had sunk more than 1 percent against the dollar earlier on Tuesday but rallied back after the parliamentary vote, with the sizable defeat for May seen forcing Britain to pursue different options.
However, there are also worries the outcome might trigger political upheaval that could lead to a disorderly exit from the European Union.
The pound traded a shade lower at $1.2846, caught in a narrow range after gyrating between a low of $1.2670 and a high of $1.2917 during the previous session.
"While the margin of May's loss was a surprise, the defeat itself was something the market had been pricing in for a long time and it appears that participants covered shorts in the pound after the vote," said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
"The market is now factoring in the March Brexit deadline being extended. In the longer run it may boil down to two scenarios - a no-deal Brexit or no Brexit at all."
The date set in law for Brexit is March 29, but with the clock ticking down quickly an extension of the deadline now appears more likely.
Against the euro, the pound was little changed at 88.70 pence after gaining about 0.4 percent overnight.Published: by Radio NewsHub