Pound plummets as Theresa May delays Brexit vote
The pound tumbled to its lowest level in 18 months after reports emerged that prime minister Theresa May has decided to postpone the final vote on her Brexit deal.
MPs in the House of Commons were due to vote on the government’s Brexit deal on Tuesday. However, the prime minister has decided to delay the vote, admitting that a significant defeat could have been in the offing.
In a statement to the House of Commons, the prime minister said she had listened to MPs’ concerns about her Brexit deal and would seek additional reassurances on the Northern Ireland backstop. She will speak to European Union leaders ahead of a summit later this week.
The news caused sterling to fall by 1.6% to $1.2526 by 16:05 on Monday, as investors grew concerned about the increased possibility of a no-deal Brexit.
The announcement also caused prices of gilts, UK government bonds, to rally. This is because they are typically seen as a safe haven during difficult market conditions. Bond prices and yields move inverse to each other, so this resulted in the yield on the 10-year gilt falling to 1.2%
The UK’s blue-chip index, the FTSE 100, was initially robust when reports of the delay started to emerge. However, after May’s statement was delivered to the House of Commons, the index started to fall and was trading down 0.65% on the day at 6,732.3 points by 16:12.