Members of Parliament on Tuesday night rejected proposals to postpone the U.K.'s departure from the European Union or to allow the country to leave without a withdrawal agreement.
U.K. MPs voted 321-298 against the Labour Party's proposal to set a deadline for a deal and postpone the U.K.'s exit if a deal isn't reached. However, the U.K. Parliament also narrowly rejected a proposal to leave the EU without a withdrawal agreement. Members of Parliament backed a proposal for Prime Minister Theresa May to renegotiate her original agreement with the EU instead.
The pound sterling gained 0.36% vs. the U.S. dollar to $1.31 on Wednesday. The FTSE All-Share index gained 1.4% after U.K. trading closed on Wednesday.
But money managers fear that chances that the U.K. will leave the European Union without a withdrawal deal have increased as EU leaders responded Wednesday that Ms. May's original deal is not open for renegotiation. March 29 is the date set for the U.K. to leave the EU.
"Judging by the reaction of sterling to the voting outcome — which fell 0.6% against the dollar (immediately following the vote) — the odds of a no-deal outcome have somewhat risen," said Charles Hepworth, investment director, managed portfolios at GAM, in an emailed comment Wednesday:. "In our view, this is all becoming exceptionally tedious. (Ms.) May's original deal will likely come back to the House unaltered, and the choice will then be between that or a no-deal Brexit. As uncertainty prevails, U.K. assets are almost impossible to trade."
Commenting on the votes in Parliament on Tuesday night, Chris Cummings, CEO of the U.K.'s Investment Association, said in an emailed comment: "With exactly two months before the U.K. leaves the EU, asset managers and the millions of savers and businesses who rely on them are looking for greater certainty."
Mr. Cummings added: "It is critical that every effort is now made to find a constructive path forward that protects Europe's savers and investors from the cliff edge effects that a no-deal Brexit could bring."
