The pound held its ground Wednesday, but Brexit risks are stacked high (Daniel SORABJI)

London (AFP) – The British pound rose back above $1.32 on Wednesday as investors eyed receding no-deal risks on another day of high drama in the long-running Brexit saga.

Europe’s stock markets retreated, after losses across much of Asia and overnight on Wall Street, with energy majors taking a hit also from a profit-sapping decline in oil prices.

Asian equities mostly rose but traders remain on edge about the global economic outlook, while Brexit continues to hog the headlines.

Britain’s parliament will hold a series of so-called “indicative” votes to seek an alternative Brexit solution as pressure mounts on Prime Minister Theresa May to resign if she wants her own unpopular plan approved.

Sterling had rallied Tuesday on fresh hope that May would avoid a chaotic no-deal departure from the European Union. Yet risks remain, according to Societe Generale analyst Kit Juckes.

– As uncertain as ever –

“Today’s Brexit horror-show/soap opera starts with debates from 2pm (1400 GMT) on various options for the way forward as the House of Commons takes control from the government,” Juckes said.

“What happens next is as uncertain as ever and one thing is clear — the foreign exchange market… is still seeing risk and positions taken off the table.”

MPs will now choose whether to cancel Brexit, hold another referendum, vote for a deal including a customs union and single market membership, or leave the EU without a deal, though the government is not bound by law to implement the decision.

In a fresh twist, May’s twice-rejected divorce plan could be revived after Brexit hardliner Jacob Rees-Mogg — one of her most vociferous and high-profile critics — said he would back it, while another, Boris Johnson, hinted that he also could.

“Though Wednesday is another… big day in the Brexit process, the indicative votes likely won’t actually take place until 7pm (1900 GMT) this evening, meaning any reaction to the results will have to wait until Thursday morning,” said Spreadex analyst Connor Campbell.

– Alphabet soup –

“Most investors’ attention (is) on Westminster and an alphabet soup of parliamentary motions that could shape the future direction of the Brexit grid lock,” said CMC Markets analyst Michael Hewson.

Brussels has given London a new extended deadline of April 12 to get May’s deal ratified or find a new way out. That replaced the previous Brexit date of March 29.

“Though avoiding a swift but hard Brexit is good news for the pound, going into a protracted period of uncertainty would continue to damage domestic industries and the currency,” said City Index analyst Fiona Cincotta.

Stock markets meanwhile remained choppy after a key US gauge raised a red flag warning of recession, adding to concerns about US and Chinese economic growth — and festering trade tensions.

– Key figures around 1200 GMT –

Pound/dollar: UP at $1.3221 from $1.3212 at 2100 GMT on Tuesday

Euro/pound: UP at 85.33 pence from 85.32 pence

Euro/dollar: UP at $1.1280 at $1.1266

Dollar/yen: DOWN at 110.37 yen from 110.64 yen

London – FTSE 100: DOWN 0.2 percent at 7,179.67 points

Frankfurt – DAX 30: DOWN 0.2 percent at 11,401.79

Paris – CAC 40: DOWN 0.1 percent at 5,302.13

EURO STOXX 50: DOWN 0.1 percent at 3,315.83

Tokyo – Nikkei 225: DOWN 0.2 percent at 21,378.73 (close)

Hong Kong – Hang Seng: UP 0.6 percent at 28,728.25 (close)

Shanghai – Composite: UP 0.9 percent at 3,022.72 (close)

New York – DOW: UP 0.6 percent to 25,657.73 (close)

Oil – Brent Crude: DOWN eight cents at $67.89 per barrel

Oil – West Texas Intermediate: DOWN 45 cents at $59.49

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