U.K. Prime Minister Theresa May has cancelled a key vote on Brexit plans as the legislation was headed for almost certain defeat. Parliament had been scheduled to vote on Tuesday on an agreement Ms. May had reached with the bloc over how it would exit the European Union.
Vote to Be Rescheduled
According to an article from nytimes.com, Ms. May was quoted in an unscheduled address to Parliament as saying “If we went ahead and held the vote tomorrow, the deal would be defeated by a significant margin. We will therefore defer the vote scheduled for tomorrow and not proceed to divide the house at this time.”
It is not clear when the vote may now take place, with some reports suggesting it will be next week and others stating it may not take place until early January.
The issue of Brexit has been a focal point of British politics for three years now, and it remains unclear if the nation will achieve a smooth transition. With so much at stake, including open borders and free trade, a hard Brexit has the potential to rattle global financial markets.
The Pound Takes a Dive
News of the delayed vote sent the pound tumbling to 20 month lows. According to Bloomberg.com, “Options traders now see more than a 50 percent chance that sterling will drop to as low as $1.2370, according to probabilities derived from currency options compiled by Bloomberg.”
The currency has been hit hard, with recent developments fueling a decline of greater than 1% versus the euro and the dollar.
The gold market is not showing much reaction to the news today. After hitting a 5-month high overnight, prices have pulled back a bit as the bulls attempt to take out the October highs in the $1252 area. The dollar is sharply higher today on the news and is likely a major factor in lack of upside follow-through today. The market appears to be in “buy the dips” mode now, however.