The British pound rallied Tuesday after the lower house of parliament overwhelmingly rejected Prime Minister Theresa May's Brexit plan.
Near 2035 GMT, the pound stood at 88.71 pence to the euro, compared with 89.57 and 89.15 Monday night.
Against the dollar, the pound traded at $1.2860 against $1.2704 and $1.2864 Monday night.
The House of Commons voted 432 to 202 against May's plan for taking Britain out of the European Union, one of the biggest defeats ever suffered by a British premier.
The negative vote had been expected but the margin was much bigger than May had hoped. Ahead of the vote, some analysts had predicted the pound could plunge with a one-sided defeat, such as 200 votes or more.
But on Tuesday, "the pound was sold pretty significantly before the outcome of the vote," said Joe Manimbo, senior market analyst at Western Union Business Solutions.
"This is a classic of 'Buy the rumour, sell the fact' situation."
BK Asset Management's Boris Schlossberg said investors simply did not believe there was a realistic chance of a so-called "hard" Brexit, in which Britain leaves the EU without any deal.
"Markets project beliefs and the underlying belief is that nobody's going to be committing economic suicide," he said.