Pound falls as ‘hard’ Brexit seen as more likely

New York, January 30

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The pound tumbled against the dollar and euro on Tuesday after the British Parliament rejected a proposal to delay Brexit.

On a mixed day for global stocks, the trajectory of Britain’s departure from the European Union was as murky as ever after a series of votes in parliament that included a rejection of a proposal to order the Prime Minister Theresa May to delay the exit if no new deal with the EU emerged by February 26.

Parliament then went on to vote 317 to 301 in favour of the amendment asking May to replace the deal’s so-called backstop provision preventing a hard border with Ireland—a proposal immediately rejected by an EU spokesman.

Near 2130 GMT, the pound was at USD 1.3069, down 0.7 per cent compared with Monday night and a similar amount against the euro.

Boris Schlossberg, a foreign exchange analyst at BK Asset Management, said the EU and British parliament were in a “game of chicken” over terms to avoid a so-called “hard Brexit,” where Britain exits the bloc without a deal.

Britain is currently scheduled to leave the union on March 29.

“There is a bigger chance than before that we could end up with a hard Brexit,” Schlossberg told AFP, adding that such an outcome was still unlikely.

“The risks have increased because time is ticking and nobody seems to have a realistic solution right now.” — AFP