Sterling fell against both the EUR and USD on Tuesday evening, after MPs rejected the proposed timetable for passing legislation to ratify Boris Johnson’s Brexit deal.
The defeat on the programme motion came after MPs initially voted in favour of Johnson’s withdrawal agreement by 329 votes to 299, but opposed the PM on his tight schedule for the withdrawal agreement to be scrutinised by 322 votes to 308.
Prior to the vote, sterling was under pressure as Johnson stated that he would withdraw his Brexit legislation and call for a general election if he was defeated on the ‘program motion’. However, in a speech given to the House of Commons following the defeat, the PM did not mention a general election. Instead, he announced that ‘one way or another we will leave the EU with this deal’. He added that he will pause attempts to pass the deal and await the decision of the EU on whether or not they will grant an extension.
EU Council President Donald Tusk tweeted that he will ‘recommend the EU27 accept the UK request for an extension to avoid a no-deal Brexit’.