The pound fell after MPs defeated a bid to delay the UK’s departure from the EU if no Brexit deal is in place.

Growing expectations that Britain can avoid a nodeal have fuelled a 3% rally in the pound this month against the dollar and the euro.

But sterling tumbled after MPs voted down a proposal to wrest control of the negotiations from Prime Minister Theresa May if she fails to secure concessions from Brussels.

Sterling fell 0.7% to the day’s low of $1.3088.

It also dropped to the day’s low against the euro, falling 0.8% to 87.33 pence.

The pound remains well below a 3-1/2 month high of $1.3218 and a spike in volatility in derivatives market reflected nervousness about the likely outcome of the votes.

The House of Commons rejected an amendment by  Labour  MP Yvette Cooper, 321 votes to 298, to extend the 29 March date of leaving the EU.

The shock 23-vote majority is a crushing disappointment for Remainers who widely expected the bid to pass – two weeks after Theresa May’s deal suffered a record defeat. 

Ms Cooper’s measure would have forced Mrs May to seek a formal extension from the EU if there was no progress by February 26.

Yet the PM won round would-be Tory rebels – and some Labour MPs – by vowing to soldier on and  reopen talks with the EU  over her 585-page Brexit deal – despite EU chiefs repeatedly saying it’s not up for discussion.

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