Sterling slips off multi-week high, volatility spikes before Brexit vote

Sterling slipped from two-month highs versus the dollar Tuesday and volatility levels spiked as markets braced for British Parliament to give the thumbs-down to Prime Minister Theresa May’s Brexit deal later in the day.

Markets are also starting to price in a delay to Britain’s March 29 departure date from the European Union or a second referendum that could end up cancelling Brexit.

Overnight volatility jumped to 23.5 percent from late-Monday levels around 8 percent.

One-month implied volatility has also crept higher to one-week highs around 12.65 percent after slipping in recent days as risks of a no-deal Brexit appeared to recede.