The loss is a major blow to May who has fought tooth and nail to secure a Brexit deal, even abandoning the vote just 24 hours ahead of its originally scheduled date to allow her to travel to Brussels to secure extra reassurances in a bid to persuade those who still held reservations.

Ultimately, her efforts proved not to be enough, and instead of making history for the right reasons, May’s defeat has been confirmed as the largest government defeat in UK political history.

Corbyn Launches Vote of No Confidence

Following the defeat, May challenged Jeremy Corbyn, leader of the opposition party, to submit a vote of no confidence. Following weeks of speculation and veiled threats, Corbyn accepted the PM’s challenge and launched a vote of no confidence which will be voted on in Parliament later today following a debate.

If Corbyn’s vote of no confidence is successful and the government loses support, a two-week period will commence during which time Labor and Conservative leaders will try to form a new administration backed by the House of Commons. After this time, an election will be called which could take place as quickly as five weeks later.

What Happens If Corbyn Fails?

However, if Corbyn’s motion is unsuccessful then focus will shift back onto the next course of action regarding Brexit. Despite the defeat, May can still amend the bill and present it before Parliament again.

However, unless she is able to secure the legally binding concessions from the EU regarding the Northern Irish backstop issue, which the DUP and Conservative party are demanding, May is unlikely to gain the roughly 120 votes needed to swing things in her favour.

Consequently, it seems that the only way in which May is likely to see her deal eventually passed through Parliament on a subsequent attempt is if UK MPs finally concede that May’s deal is better than leaving with no deal.

GBP Remains Resilient

Indeed, the resilience of GBP following news of the defeat suggests that the market suspects that this might be the case, or that Article 50 will end up being extended.

The absence of a sharp sell-off in GBP reflects firstly the lack of conviction behind Corbyn’s vote of no confidence and secondly the increased likelihood of Article 50 being extended. However, the EU has been resolute in its vow to keep the March 29th deadline and has said that only a significant, legitimate reason would be cause to grant an extension.

May To Pursue Cross Party Support

Speaking just after the defeat, May told Parliament that she is open to reaching out across the political divide in a bid to see her deal approved.  The PM now has until Monday before she must return to Parliament to present her new plan. This new plan will be an “amendable motion,” meaning MPs can suggest elements to include as the motion is being put forward.

One such suggestion that might be put forward is that of a second referendum. Support for a second public vote has been growing sharply, and MPs might back a motion for a second referendum to be held in the event of May’s bill being voted down again.

Technical Perspective

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The loss of momentum in GBPUSD is visible in the choppy overlapping price action of this recent corrective rally. Price is now sitting just below channel resistance which, while intact, keeps focus on an eventual break lower. Above the channel high, however, and the 1.3304 top will be brought into focus. To the downside, the 1.2482 level remains the key support to watch.