Pound hits 7-month low ahead of key Commons vote

There’s been more weakness seen in sterling this morning, with the pound falling to its lowest level since November against the US dollar as markets await what could prove to be a pivotal MP vote this afternoon. The depreciation and an improvement in risk sentiment have contributed to a strong move higher in the FTSE, with the benchmark gaining more than 80 points to reach its highest level of the week.

MPs to vote on final Brexit say

Theresa May faces a potentially key vote in the House of Commons later, with MPs set to decide on how much of a say politicians will have on a final Brexit deal. The government was defeated in the House of Lords on Monday with the upper chamber putting forward an amendment which would give MPs a greater say if the UK government can’t reach a deal with the EU by the 29th March next year. From the market’s perspective if the amendment is rejected then it could be seen to signal a greater possibility of a hard Brexit and this could well apply more selling pressure to sterling. Market-implied probabilities of an August rate hike for the BOE continue to slide, having fallen back below the 50% level in the past couple of weeks and it remains hard to see any change for the foreseeable future given the current political and economic backdrop.  

Ocado jumps higher while Berkeley slumps

The best performing blue-chip in London is Ocado, with the stock higher by more than 5% after some favourable broker upgrades. The online grocer has only been in the FTSE 100 index for a little over a month but it is wasting little time in building on its meteoric rise and comments from Peel Hunt analysts who called the firm the “Microsoft of retail” have boosted the stock further after gains in excess of 150% in the past 6 months alone. Despite the strong move higher in the broader benchmark there are still some pockets of weakness with homebuilders the worst hit. Berkeley Group, which focuses on London based projects has warned that its full-year profits are likely to be around a third lower and the share price has fallen more than 4% in reaction. For the year ending April 2018 the firm reported stellar profits but it seems to be attempting to rein in any over exuberance as far as future prospects are concerned.

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