Pound trades higher as Brexit remains in focus

Sterling moved higher on Wednesday as currency traders looked towards another Commons vote on Brexit, with MPs widely tipped to rule out a no-deal EU divorce.

The pound was up over 1% versus the US dollar at 1.321 at the London market close, and up a similar amount against the euro at 1.169.

Markets also appear to be pricing in an extension to the Article 50 process when MPs return to the ballot box on Thursday, which is also driving the British currency higher.

Connor Campbell, financial analyst at SpreadEx, said: “It appears that sterling is now working on at least two assumptions.

“One, that there is no appetite for a ‘no-deal’ Brexit among the majority of MPs – including the Prime Minister herself – something that will be reflected in Wednesday’s vote.

“And, two, that this will lead to a pound-positive outcome from Thursday’s ballot on whether or not to request an extension to Article 50.”

It comes after Theresa May faced more humiliation on Tuesday, when her Brexit proposal was again roundly rejected by MPs.

The FTSE 100, meanwhile, closed the day broadly flat, rising 8.04 points, or 0.11%, to 7,159.19.

In stocks, fund giant Standard Life Aberdeen led the way after appointing Keith Skeoch as its sole chief executive, with former joint boss Martin Gilbert stepping down to become vice chairman.

The group – Britain’s biggest listed asset manager – said Mr Gilbert will also become chairman of Aberdeen Standard Investments as well as an executive director of the board.

The move marks the first big change under the chairmanship of former HSBC chairman Sir Douglas Flint, who took on the job from January 1.

Shares closed up 5.8p at 250.8p, even as Standard Life reported underlying pre-tax profits falling to £650 million in 2018 from £660 million in 2017.

Morrisons shares were trading flat after the supermarket posted a hike in annual underlying profits, despite a slowdown in retail sales as Brexit uncertainty knocked shoppers’ confidence.

The UK’s fourth biggest supermarket reported an 8.6% rise in underlying pre-tax profits to £406 million for the year to February 3.

The chain saw like-for-like retail sales growth slow to 0.6% in the final three months, down from 1.3% in the third quarter.

Shares ended the day up 1.35p at 226.5p.

British American Tobacco shares took a knock, despite the firm’s Canadian subsidiary receiving creditor protection as it battles a ruling ordering cigarette firms to shell out 15.6 billion Canadian dollars (£8.8 billion) in a class action lawsuit.

BAT’s Imperial Tobacco Canada is liable for 9.2 billion Canadian dollars (£5.2 billion) of the suit, but on Wednesday it was granted protection under the Companies’ Creditors Arrangement Act (CCAA).

This, the firm said, has the effect of staying all litigation against it.

Nevertheless, shares ended the day towards the bottom of the FTSE 100, closing down 106p at 2,980p.

In Europe, Germany’s DAX was up 0.42% and France’s CAC was up 0.69%.

A barrel of Brent crude was trading at 67 US dollars, an increase of 0.8%.

The biggest risers in the FTSE 100 were Standard Life Aberdeen up 5.8p at 250.8p, BP up 11.2p at 547.8p, Wood Group up 11.2p at 573.8p and Tui up 12.8p at 770p.

The biggest fallers on the FTSE 100 were GVC down 26p at 542p, Hikma down 71p at 1,584.5p, BAT down 106p at 2,980p and NMC down 62p at 2,610p.