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Sterling takes hit after UK Parliament votes down Brexit deal

As Theresa May suffered a triple defeat in the House of Commons, market participants will watch the second day of debates very closely.

Brexit: To vote or not to vote, or cancel the whole thing?

The first of five days of debate in the House of Commons about the Brexit withdrawal agreement has culminated in a triple whammy for Theresa May, sending the Pound close to 17-month lows.

The government yesterday, 4 December lost two votes, increasing calls for a second referendum.

First, the UK prime minister will have to publish the legal advice on the Brexit agreement instead of the Committee for Privileges and Conduct reviewing it in private. Second, the government was found in contempt of Parliament for withholding the full legal advice.

Later in the day, Theresa May suffered a third defeat over changes to the parliamentary process in the event that the Commons voted down the withdrawal agreement next Tuesday, 11 December. As a result, Parliament could wrest control of the Brexit process from May and potentially push for a Plan B, despite European chief negotiator Michel Barnier stating repeatedly there were no renegotiations on the table.

Investors will keep a keen eye on the second day of debates today.

In the US, stock markets fell sharply on concerns over the US-Chinese trade tensions. The S&P 500 fell 3.2 per cent and the Nasdaq dropped by 3.8 per cent. With the country holding the state funeral for former president George HW Bush, all financial data releases have been postponed for 24 hours and stock markets are closed. The reduction in liquidity could drive volatility in currency markets.

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