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UK lawmakers approve Brexit extension to June 30

The U.K. House of Commons on March 14 voted in favor of postponing the March 29 Brexit date, avoiding, for now, the risk of crashing out of the EU without a deal.

Lawmakers voted 412-202 backing a government motion to delay the departure from the bloc until June 30, as long as a Brexit deal could be passed by March 20. They also turned down a proposal to trigger a second national referendum on leaving the EU, put forward by former Conservative Party member Sarah Wollaston, in a 334-85 vote.

Sterling was down 0.50% against the U.S. dollar when the voting began at 5 p.m. London time with the Wollaston amendment. By 8 p.m. London time, the pound was trading 0.83% lower at $1.32.

A delayed Brexit will continue to support sterling, Lee Hardman, currency analyst at global bank MUFG, said in a research note. "Gains may be dampened in the near-term, but the overall consensus towards a delayed and potentially softer Brexit remains supportive for the pound."

However, a no-deal Brexit remains the default path forward unless a withdrawal agreement is agreed upon and approved before any new deadline. Any no-deal scenario coming to fruition could send the pound back below $1.20, Hardman said.

An amendment, proposed by the Labour Party's Hilary Benn and supported by a group of cross-party senior backbenchers, that sought for lawmakers to discuss the best way forward was rejected in a 314-312 vote. Lawmakers also rejected Labour leader Jeremy Corbyn's proposed Brexit delay, seeking time for lawmakers to find a majority for "a different approach."

The votes followed lawmakers' rejections of a no-deal scenario and Prime Minister Theresa May's revised withdrawal agreement with the EU earlier this week. Labour party member Chris Bryant withdrew his amendment that, if passed, would have blocked another vote on May's deal.

May has said that if a deal could not be passed by March 20, the Brexit delay could last longer, and would require the U.K. to hold European Parliament elections in May.

Any extension needs the unanimous approval of EU member states, with European Council President Donald Tusk urging EU leaders to be open to a longer extension, if necessary.

EU chief Brexit negotiator Michel Barnier said March 13 that the current Brexit deal is the only one available and that the risk of a no-deal Brexit has never been higher.