Bank of England governor Mark Carney has said the pound’s rebound after the Commons vote signals market hope that Brexit can be delayed, but warned over further volatility.
In a hearing with MPs on the Treasury Select Committee, he said financial markets also saw the prospect of the UK crashing out the EU without a deal as having waned.
However, Mr Carney said he did not put “much weight” on short-term market movements and that the market is “waiting”.
The hearing with the Bank’s Financial Policy Committee (FPC) comes after the crushing defeat for Prime Minister Theresa May’s Brexit deal in Parliament on Tuesday night, which initially sparked a steep fall in the value of the pound followed by a marked bounceback.
Sterling has since held largely firm, at just under $1.29 and g1.13.
Mr Carney said the “sharp rebound” in sterling in the immediate aftermath of the vote “would appear to reflect some expectation that the process of resolution would be extended and that the prospect of no-deal may have been diminished”.