Pound fights back on market hopes for Brexit Plan B

The pound has held firm on hopes over a Plan B for Brexit as Prime Minister Theresa May fights off another challenge to her leadership.

Sterling had already clawed back initial heavy losses overnight after Tuesday’s crushing Brexit deal defeat in Parliament, but strengthened further on Wednesday as markets assessed what the vote means for the UK’s withdrawal from the EU.

The pound held at just under 1.29 US dollars and stood at nearly 1.13 euros.

Sterling had slipped as low as 1.2669 against the dollar immediately after the Brexit vote, but soon bounced back.

Jasper Lawler, head of research at London Capital Group, said traders were hoping the Commons defeat might kick Brexit into the long grass.

He said: “Rather than seeing this as a step closer towards a no-deal Brexit, as Theresa May had originally threatened, traders are seeing this as a move towards extending Article 50 and delaying Brexit.

“The perceived probability of a no-deal Brexit is diminishing, which is pound-positive.”

Connor Campbell, financial analyst at Spreadex, said: “The no-confidence motion tabled by Labour seems to have given the currency a glimmer of hope that a softer Brexit, a Brexit delay, or, whisper it, no Brexit at all, might be in the offing.”

But experts warned of further volatility ahead for the pound, even if Mrs May and the Government win Labour’s vote of no confidence.

Mr Lawler added: “Whilst this level of uncertainty looms over UK politics and Brexit, we don’t expect the pound to push much higher.”

The FTSE 100 Index was also holding firm on Wednesday, down four points at 6891.