Friday 29 March 2019 3:23 pm | Updated: Monday 03 June 2019 12:50 am

Sterling tumbles as MPs reject Brexit deal for third time

The pound dropped sharply today following British MPs' decision to again vote against Prime Minister Theresa May’s Brexit deal at the third time of asking.

The pound briefly fell below the $1.30 mark for the first time in over two weeks, hitting $1.299 before rebounding somewhat to $1.303.

The pound had previously hit $1.299 on 11 March, the day before the second so-called meaningful vote on May’s deal, which MPs rejected by 149 votes.

Against the euro the pound fell 0.2 per cent over the day hitting €1.157 before rising again to €1.160.

Sterling had risen in the morning as Conservative MPs such as Dominic Raab who were previously opposed said that they would vote in favour of the deal. The thought among traders that the political uncertainty might end had caused the pound to rise to $1.312 by 11am.

However, it started to fall just before one pm as doubts set in. Between 2.30pm, when MPs voted on the deal, and 2.45pm, sterling fell 0.5 per cent as traders reacted to the news that the agreement had been rejected by 58 votes.

Senior market analyst at City Index Fiona Cincotta said: “The reason the pound has fallen… is because investors are now assuming that ministers will force a softer version of Brexit through.”

Dean Turner, UK economist at UBS Global Wealth Management, commented: “Sterling hasn’t responded favourably to today’s result, likely interpreting an increased risk of a no-deal scenario two weeks hence.”

He added: “That said, our view remains that MPs will ultimately avoid this outcome.”

Caxton FX’s senior analyst Michael Brown said: “Political headwinds facing the pound have now increased, with parliament now needing to find a consensus on a new way forward, likely through a second round of indicative votes on Monday increasing the prospects of a long extension.”