London (CNN Business) The British pound shrugged off a dramatic vote in the UK parliament that left the government's Brexit plans in tatters.

Parliament on Tuesday struck down the divorce deal that Prime Minister Theresa May had negotiated with the rest of the European Union by a record margin. The defeat was expected, but the size of the loss — 432 votes to 202 — was a surprise.

The pound, which had fallen below $1.27 earlier on Tuesday, erased its losses after the vote and strengthened to $1.28. Some analysts had predicted the pound would rally if May suffered a major defeat because that would raise the chance of Brexit being delayed.

The crushing loss means parliament may now wield greater control over the process. Capital Economics said lawmakers could move to delay Brexit while they work on alternatives.

"Most importantly the size of the defeat appears to reduce the chances of the United Kingdom leaving the European Union without a deal," said Paul Dales, chief UK economist at Capital Economics.

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