Brexit's high noon has arrived and it spells danger for currency traders

Anti-Brexit demonstrators are seen protesting outside the Houses of Parliament.
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Anti-Brexit demonstrators are seen protesting outside the Houses of Parliament.

U.K. Prime Minister Theresa May's ultimate showdown has finally arrived.

Her high-stakes parliamentary vote on her Brexit plans is due later on Tuesday and the outcomes vary wildly from soaring success to complete political collapse.

Currency traders lie in wait, hoping not to be caught on the wrong side of a sterling trade that could whip wildly in either direction as the debate rages and the votes roll in. It could be a late night in the City of London and thin trade from other regions of the world could exasperate matters.

"Sterling liquidity in Asia is limited and as such there is a risk that even if a no vote is assumed that does not preclude sterling selling off, impacted by headline risk," Jeremy Stretch, the head of G-10 foreign exchange strategy at CIBC Capital Markets, told CNBC via email.

The consensus expects defeat for May and her Brexit proposals but what's crucial is by how much. She needs the backing of 320 lawmakers, more than half of the 639 that vote in Parliament.

Experts predict a defeat of 50 votes or less could be a positive for sterling, in the hope that she could push through some minor amendments in the next few weeks. A loss of more than 150 votes could see the opposite reaction.

"A larger-than-expected defeat could be seen as GBP (pound) negative as it widens the range of potential political outcomes (including a leadership challenge, a general election, a Norway-style deal or a second referendum)," Simon Derrick, chief currency strategist at BNY Mellon, told CNBC via email.

Other experts are simply not convinced that clients should be trading the pound during such a rocky few hours.

"Stay away from spot it altogether," Stephen Gallo, the European head of foreign exchange strategy at BMO Capital Markets, told CNBC via email.

"The leap of faith trade at this point would be to simply get long, on a bet that the odds are wrong and the Withdrawal Bill will actually make it through the lower house. So if you're feeling very lucky, then be my guest."

My guess? I'll bet that the vote is rejected, but not by much, and we'll be back watching another crucial vote in the next few weeks with May still in power.