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Prime Minister Boris Johnson suffered a big defeat in parliament’s upper chamber on Monday over proposed laws that would allow him to breach the terms of Britain’s European Union exit treaty.

Reacting to the result of the vote, Labour’s leader in the Lords, Baroness Smith said:

I am sure some in government will initially react with bravado and try to dismiss tonight’s historic votes in the Lords. To do so, however, would underestimate the genuine and serious concerns across the UK and beyond about ministers putting themselves above and beyond the rule of law.

The government should see sense, accept the removal of these offending clauses, and start to rebuild our international reputation.

The House of Lords voted 433 to 165 to remove a key clause in a section of the bill which would give ministers the power to unilaterally override parts of the exit treaty relating to Northern Ireland.

Now that peers have voted to remove the clause, Boris Johnson will have to decide whether to reinsert the clause before the bill’s return to the Commons in the coming weeks, despite its potential to jeopardise a trade deal with the US.

The president-elect Joe Biden has made it clear that he believes the proposals threaten the Good Friday agreement.

Meanwhile, the Lords are now voting on removing Clause 44 and inserting a new clause that is intended to establish that goods from Northern Ireland would not be discriminated against in the operation of the UK market.

The result is expected shortly.

Market reaction

GBP/USD is unchanged on the news, as markets were expecting the defeat. 

The pound is steady at 1.3159 at the time of writing, digesting the overnight volatility.