Sterling has shot up after Theresa May’s flagship speech on Brexit, as the Prime Minister announced there will be a vote in both house of Parliament on triggering Article 50.
Chancellor Philip Hammond also announced the UK would be leaving the EU’s Single Market, which was then confirmed shortly afterwards in the Prime Minister’s speech.
The stronger pound hit the FTSE 100 index, which had fallen by 0.58 per cent at the time of publication. Around 70 per cent of earnings on London’s blue chip index are earned in foreign currencies, meaning a weaker pound boosts earnings for London-listed companies.
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The pound had risen by over two per cent at the time of publication to break far through $1.23 against the US dollar. Before May’s speech, cable was trading at $1.2179 against the dollar.
Against the euro the pound had gained 1.49 per cent at the time of publication to reach €1.1534, after hitting day lows of €1.1340.
Markets had already priced in the prospect of the UK leaving the Single Market to a large extent, after May strongly hinted at it in an earlier interview. Sterling had previously suffered a strong sell-off in the New Year.
Sterling has fallen sharply as markets have adjusted to hints of a so-called “hard” Brexit from the Prime Minister.
Gold came off a seven-week high which had been partly driven by a weaker dollar. Futures for the yellow metal fell back to trade around $1,214 per troy ounce, after breaking the $1,218 mark earlier in the day. Meanwhile, spot prices had increased by 1.49 per cent at the time of publication.
Gold is traditionally bought by investors as a safe-haven asset.