'These are not normal times': May's defeat
The UK Government lost the vote on its Withdrawal Agreement and Political Declaration on the UK's future relationship with the EU by a historic margin of 432 votes to 202.
This led Labour leader Jeremy Corbyn to table a vote of no confidence in the government immediately after the defeat, which will take place this evening.
If Labour wins the vote then it is expected to call for a general election while if unsuccessful May will have to come up with a ‘plan B'.
Laith Khalaf, senior analyst at Hargreaves Lansdown, warned the vote tonight would be another"pinch point" for currency markets.
He said to expect further swings in sterling over the coming months with the pound ultimately finding a new level but warned"it is not going to be a smooth journey".
Despite the continued uncertainty, markets are beginning to price in the diminishing chances of a no-deal Brexit.
On the news May's deal had been defeated, sterling bounced 0.1%, which shows markets believe a softer Brexit may now take place.
David Roberts, co-manager on the Liontrust Strategic Bond fund, added:"Markets, perhaps unlike voters, are ruled by the head, not the heart and again are stating that compromise, that working together, can bring benefits to all.
"Perhaps we are remembering - a small share of a big pie is better than a large share of no pie?"
No confidence vote
Nigel Green, founder and CEO of deVere Group, noted the longer the Brexit process is extended, the less chance of a no-deal Brexit there was, while the likelihood of a second referendum rejecting Brexit or a softer deal was increasing.
Green added it was unlikely May would be defeated in the no-confidence vote tonight, meaning a general election was a low probability outcome.
"Following Corbyn's tabling of a vote of no confidence, there is greater chance of a general election. But in normal times this would spook the markets and have a directly negative impact (in the short-term at least) on the pound, the FTSE and UK financial assets generally," he said.
"But these are not normal times, and the DUP and Conservative MPs who vote against the Government's Brexit bill are unlikely to vote against the Government. A general election seems a low probability outcome.
"As the uncertainty rumbles on, portfolio diversification should remain the major strategy for investors."
Meanwhile, Richard Buxton, head of UK equities at Merian Global Investors, said the continued uncertainty will remain a"significant" handbrake on the UK economy and stockmarket.
If a deal could be agreed, Buxton predicted the Bank of England could hike interest rates as many as three times this year but warned a no-deal Brexit would force the central bank to cut rates.
He added this last outcome had a strong chance of being avoided due to the"strength of feeling" in Parliament of crashing out of the EU without a deal.
"Notwithstanding increasing optimism that a no-deal scenario can now be avoided - there is clearly no mandate for that outcome, either - continuing uncertainty over Brexit will remain a significant 'handbrake' on the UK economy and UK stockmarket," he said.
"Only when certainty over the UK's future relationship with the EU emerges is business confidence and investment, and indeed consumer confidence, likely to return.
"Until such a time, the 'handbrake' will, I believe, remain obstinately jammed," he continued."Any extension of the Article 50 process would, in my view, simply perpetuate the present impasse."
Hermes IM chief executive Saker Nusseibeh added his firm has been preparing for a hard Brexit ever since the referendum, but the vote has means uncertainty has prevailed for the UK public.
Most people would prefer to see an end to uncertainty," he said."However, the sad truth is that continued uncertainty has prevailed, and there appears to be no clear plan B."
However, Seven IM's chief strategist Terence Moll points out that long-term investors can take advantage of the volatility in the market.