British pound surges 2% vs US dollar after UK lawmakers vote to reject a no-deal Brexit

Sterling rose on Wednesday after U.K. lawmakers rejected leaving the European Union without a withdrawal agreement.

“Our base view, and the currency is telling you this, is we will get some form of resolution,” said KKR’s global head of macro and asset allocation Henry McVey on CNBC’s Closing Bell. “Clearly, there’s been slowing related to Brexit. The way we’re approaching it is this is going to be a slow-growing economy [with] low inflation.”

The rejection of a no-deal Brexit, passed with 312 votes to 278, set up another vote Thursday on whether its official departure date should be extended. The result was widely expected as most Members of Parliament want to avoid the economic uncertainty and trade disruptions that it could cause.

“Parliament has made it clear that unless there is a deal, they are not ready to leave the EU. Sterling traders are in love with this concept and this pushed the price of Sterling higher against the dollar,” Naeem Aslam, chief market analyst at Think Markets UK, said in a note.

Sterling is poised to post its biggest gain since at least November, extending its comeback this year from its 21-month low hit in January.

The vote was seen as part of some concessions given to Parliament by Prime Minister Theresa May a few weeks ago and was only confirmed Tuesday when MPs resoundingly rejected her Brexit withdrawal agreement for a second time.

— With reporting from CNBC’s

Holly Ellyatt

and Fred Imbert

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