Pound beholden to Brexit as PM braces for defeat
Sterling endured a rollercoaster ride on Tuesday as Theresa May’s latest efforts to secure backing for her Brexit deal flopped, with more volatility expected as MPs prepare to vote on it.
The pound was trading at 1.325 US dollars this morning, but had slumped to 1.308 by the London market close, a fall of 1%.
Versus the euro, sterling was down 1% at 1.158.
The declines came after the Prime Minister’s hopes of securing House of Commons approval for her Brexit deal suffered yet another shattering blow as Tory Eurosceptics said they would not back it and her DUP allies said they would vote against.
Agreements reached by Mrs May in 11th-hour EU talks in Strasbourg on Monday failed to deliver the legally binding changes the ultra hard Brexit wing of Tories demanded.
Their judgment came after Attorney General Geoffrey Cox told MPs that changes secured by Mrs May “reduce the risk” that the UK could be trapped indefinitely in the backstop, but do not remove it altogether.
MPs will vote on the deal on Tuesday evening, but the odds are stacked against Mrs May and currency traders will now turn their attention to ballots on no deal and an extension.
Connor Campbell, financial analyst at SpreadEx, said: “Theresa May is now almost guaranteed to lose the evening’s ‘meaningful’ vote.
“That means attention likely already turns to tomorrow’s no deal vote; it’s going to be interesting to see how granular sterling gets in its reactions as Wednesday goes on.”
Meanwhile, the FTSE 100 eked out small gains, closing up 20.53 points, or 0.29%, at 7,151.15.
In stocks, WPP ended the day in the red, even as it trumpeted the appointment of Cindy Rose, the boss of Microsoft’s UK business, to the board as it looks to bolster its digital offering.
Ms Rose’s appointment to WPP’s board comes as the company battles increasing competition from Facebook and Google as more advertising shifts online and as large clients cut spending on promotions.
Shares closed down 2p at 853p.
On the FTSE 250, Domino’s shares closed up despite the firm posting falling annual profits and admitting store openings will be hit this year amid an escalating row with its franchisees.
The pizza delivery company said that, while its pipeline of new stores is set to hold firm in 2019, the actual number of openings is likely to be lower given “ongoing franchisee discussions”.
The news came as it posted a 22% plunge in annual pre-tax profits to £61.9 million after suffering “growing pains” in its international business.
But shares closed up 1.6p at 234.7p.
In Europe, Germany’s DAX was down 0.17% and France’s CAC 40 was up 0.22%.
A barrel of Brent Crude was changing hands for 66.6 US dollars, an increase of 0.03%.
The biggest risers on the FTSE 100 were Evraz up 15.8p at 611p, Schroders up 66p at 2,675p, Taylor Wimpey up 3.95p at 181.95p and Wood Group up 11.4p at 562.6p.
The biggest fallers on the FTSE 100 were GVC Holdings down 20p at 568p, Rentokil Initial down 7.5p at 346p, Intertek down 95p at 4,670p and Hikma Pharmaceuticals down 22p at 1,655.5p.