LONDON • The British pound rose yesterday as investors prepared for Parliament to vote on a series of Brexit options, with some hoping that the current uncertainty would end in a softer Brexit than Prime Minister Theresa May's defeated withdrawal agreement.
Mrs May's deal was voted down for a third time by lawmakers last Friday, sending sterling plunging to below US$1.30.
But the British currency has held at or above that level since, suggesting some investors have priced out the prospect of Britain crashing out of the European Union without a deal and instead expect a long delay to the exit or Brexit to emerge eventually where closer ties are maintained to the trading bloc.
MUFG analysts, referring to Mrs May, said: "There is a growing expectation that a (House of) Common's majority could coalesce around a softer Brexit that includes a Customs union, but she is facing more threats from Cabinet members to resign if she decides to pursue a softer Brexit."
Sterling rose 0.4 per cent to US$1.3083, also finding support from better-than-expected manufacturing survey data. The pound gained 0.1 per cent to 85.980 pence per euro.
The analysts said that while a no-deal Brexit on April 12 remained a risk for the pound, an emergency EU summit on April 10 could - if British lawmakers cannot agree anything this week - see a long delay to Brexit.
Parliament voted on different Brexit options yesterday and Mrs May could try to bring her deal back to a vote in Parliament as soon as today. But Mrs May's government and her party remain in open conflict.
Mr Marshall Gittler, a strategist at ACLS Global, said he considered a no-deal Brexit "as a higher possibility, even though it's officially been ruled out, simply because I don't see any of the other endings as particularly possible".
The IHS Markit/CIPS UK Manufacturing Purchasing Managers' Index was in at a reading of 55.1 last month, above the 51 level forecast by economists polled by Reuters.
The survey showed that factories in Britain stockpiled for Brexit at a frenzied rate last month, pushing manufacturing growth to a 13-month high.