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Pound slammed after Theresa May blocked from new votes on her Brexit deal

Alanna Petroff
Senior Economics Correspondent at Yahoo Finance UK

The UK pound was sliding again on Monday as traders reacted to news that prime minister Theresa May was being blocked from putting forward her Brexit deal for another parliamentary vote this week.

Parliament speaker John Bercow made the announcement on Monday afternoon, saying the “government cannot legitimately … resubmit to the House [of Commons] the same proposition or substantially the same proposition as that of last week.”

However, he said, another vote could go ahead if May’s Brexit deal was significantly changed.

May’s Brexit deal with the European Union was rejected by the UK parliament twice — once in January and once last week. Instead of accepting the deal, British members of parliament (MPs) now hope to get an extension to the Brexit deadline on 29 March.

The UK pound (GBPUSD=X) slid by as much as 0.8% against the US dollar on Monday to trade just below $1.32, but then recovered some lost ground. Sterling (GBPEUR=X) was down by as much as 0.9% against the euro, with losses accelerating after Bercow’s announcement in parliament.

The UK pound dropped sharply on Monday against the US dollar. Chart: Yahoo Finance

“This is a big blow for the government as it effectively closes off another vote this week unless May can pull a rabbit out of the hat,” said Neil Wilson, chief market analyst at Markets.com.

“However, it is worth noting that the government has already rowed back expectations for a third vote, with government ministers saying over the last day or so that they would only bring a vote if they thought they would win it,” he said.

British MPs voted overwhelmingly against the deal during the two previous votes and there was little hope that a third vote would seal the deal. May’s deal was defeated by 230 votes in January and then by 149 votes on 12 March.

May had earlier warned lawmakers that unless they approved her Brexit pact, Britain’s exit from the EU could face a long delay. Many Brexiteers fear this could mean Britain may never leave.