Yesterday saw an initial spike for the pound against the euro, following news that UK Prime Minister Theresa May had gained concessions on the Irish border from Brussels.
There were two forms of documentation that were agreed earlier in the week in Strasbourg. The first of which was lauded as jointly legally binding on the withdrawal agreement whereby Britain gains the right to start a formal dispute against the EU if it tried to keep Britain tied to the Irish backstop permanently.
The other document is a joint statement regarding the future relationship between the UK and the Bloc which commits to replacing the backstop before December 2020.
However, Attorney General Geoffrey Cox announced that the documents were not legally binding and we saw a swift heavy fall in GBP value. I was trading through this drop and I can assure you it is not pleasant when you are trying to book a trade with such volatility.
This put the nail in the coffin for May's deal and the deal failed to be voted through by Parliament. The market moves on rumour as well as fact and the vote failing to be put through was already largely factored into the rates.
Next steps if today's vote isn't passed
There will be another vote today on whether MPs are willing to allow the UK to leave the EU without a deal in place. Many MPs have been vocal about their concerns about leaving without a deal so many expect them to rule out a no deal at this stage. Whilst volatility cannot be ruled out, some have the view that this vote may not have a large impact as this may already have been factored into current levels.
If that is the case and a no deal is temporarily taken off the table we will then be looking at a third vote on Thursday on whether the UK will request an extension to Article 50 from the EU until after the Brexit deadline of 29th March. This is quite likely to happen and could result in sterling volatility.
To read more on the political factors with the potential to impact interbank exchange rates this month, download our monthly currency forecast.