The pound has dropped across the board after Theresa May lost two Brexit-related votes in as many days.
Britain’s main opposition Labour Party will demand a general election if May loses a vote in parliament over her Brexit plans next week, we expect Corbyn to mention this today.
The British currency was hit by the possibility of a Corbyn government implementing high spending policies that could impact British finances.
But expectations for sterling volatility fell as Wednesday’s vote also appeared to reduce the chance of a no-deal Brexit.
British lawmakers have demanded that government come up with a plan-B within days if May loses the vote on her Brexit deal on Jan. 15.
The risk of sterling falling against the dollar is deemed the lowest in over six months, according to cable option pricing.
Expectations for sterling price swings have also fallen in the last few sessions, dropping from recent highs, with investors now expecting less implied volatility over a one-month period.