Sterling falls as investor fears of a general election grow after Theresa May’s second Commons defeat in 24 hours

Sterling has dropped against the euro and the dollar this morning after Theresa May suffered another bruising Commons defeat ramping up investor fears of a general election.

The pound fell to a weekly low against the euro of €1.105 before recovering slightly and also slid 0.2 per cent against the dollar.

It comes after a Commons vote yesterday ruled that Theresa May must return with a Brexit “Plan B” within three days of a defeat on her deal, rather than the expected 21 days.

Earlier this week another amendment was passed, allowing Parliament to vote on alternative policies, such as a “managed no-deal” or another referendum, if the Prime Minister’s deal is defeated next week.

Societe Generale FX strategist Alvin Tan said: “[Wednesday’s] vote undermines the Prime Minister’s authority and brings up the possibility of a general election.

“She has lost two votes this week alone now.”

Brexit uncertainty saw the pound subjected to wild volatility at the end of last year, as Theresa May’s deal was tabled, approved by cabinet, and then delayed.

Think Markets analyst Naeem Aslam said sterling was avoiding dramatic volatility this time around as traders had already priced in the various Brexit outcomes.

He said: “Traders already priced all of this drama and hence we have not seen much of volatility creeping.

“Traders have already priced her defeat in parliament.”

Brexit uncertainty saw the pound subjected to wild volatility at the end of last year, as Theresa May’s deal was tabled, approved by cabinet, and then delayed

Jeremy Corbyn is expected to say later today that Labour will demand a general election if May’s deal is defeated on Tuesday.