British Prime Minister Theresa May confirmed on Monday that Tuesday's crucial House of Commons vote on her Brexit deal will be postponed.
Even before May confirmed the decision, the pound fell to an 18-month low.
Just hours after 10 Downing Street insisted the vote would go ahead Tuesday night as planned, May addressed MPs in the House of Commons to tell them of their change of plan.
May told MPs there was opposition to the Irish border issue, the so-called backstop, and if the vote went ahead Tuesday, it would be lost by a large margin.
She said she would now hold emergency talks with EU leaders to discuss possible changes to the backstop. She told MPs no deal with Europe was possible without a backstop clause in the agreement.
May said the challenge of the border issue must be met with real and workable solutions. She will consider ways of how MPs can be given a say over the introduction of a backstop.
A key part of the Brexit negotiations was about the border that separates Northern Ireland and the Republic of Ireland. The agreement on the border was contained in the Britain-EU Brexit deal.
Both London and Brussels committed to avoiding the return of a "hard border" -- physical checks or infrastructure -- after Britain leaves the EU in March 2019.
She held a telephone conference with her senior cabinet ministers Monday when she informed them of her decision.
Despite Downing Street's insistence that the vote would proceed there was a frenzy of claims over the weekend the vote would be called off.
The Guardian newspaper in London said it was a clear admission by the prime minister that she does not believe she can get her unpopular EU withdrawal agreement through the House of Commons.
Political commentators had predicted she would be facing a disastrous three-digit defeat when the vote takes place, with up to 100 of her own Conservative voting with opposition politicians.
In her speech, May added the government will step up its planning for a no-deal Brexit.
With Britain due to leave the EU on March 29 next year, the Brexit bill must meet a Jan. 21 deadline for a vote in parliament.
