Sterling rose on Wednesday after U.K. lawmakers rejected leaving the European Union without a withdrawal agreement.

The pound was up 2 percent against the dollar at $1.3339 as investors become more optimistic that a hard Brexit would be ruled out. That's the biggest move since April 2017.

"Our base view — and the currency is telling you this — is we will get some form of resolution," said KKR's global head of macro and asset allocation Henry McVey on CNBC's Closing Bell. "Clearly, there's been slowing related to Brexit. The way we're approaching it is this is going to be a slow-growing economy [with] low inflation."

The rejection of a no-deal Brexit, passed with 312 votes to 278, set up another vote Thursday on whether its official departure date should be extended. The result was widely expected as most members of Parliament want to avoid the economic uncertainty and trade disruptions that it could cause.

"Parliament has made it clear that unless there is a deal, they are not ready to leave the EU. Sterling traders are in love with this concept and this pushed the price of Sterling higher against the dollar," Naeem Aslam, chief market analyst at Think Markets UK, said in a note.

WATCH: Niall Ferguson: Brexit has turned into a student asking for a paper extension