Sterling edges higher as Brexit remains in focus
The British currency rose 0.3% versus the US dollar to 1.289 at the London market close.
The pound moved higher on Tuesday as currency traders reacted to Theresa May’s latest Brexit speech, anticipating an extension to the Article 50 process.
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Sterling rose 0.3% versus the US dollar to 1.289 at the London market close. Versus the euro, the pound was down 0.1% at 1.139.
It came after the Prime Minister urged MPs to “hold their nerve” and support her efforts to secure a withdrawal deal which will deliver Brexit on March 29.
In a statement updating the Commons on progress in talks, Mrs May acknowledged she would need “some time” to seek legally-binding changes from the EU to the controversial backstop for the Irish border.
Fiona Cincotta, of City Index, said: “The pound bounced off a three-week low after Theresa May said she needed more time to renegotiate with Brussels over her Irish backstop arrangement.
“At these levels it is still safe to say that the markets are not pricing in a no deal Brexit. Pound traders are seeing an extension of Article 50 as the most likely scenario.”
The stronger pound weighed on the FTSE 100, which ended the day up just 4.03 points, or 0.06%, at 7,133.14.
In stocks, Tui shares were under the cosh after the holiday giant blamed last year’s “unusually long and hot summer” and the weak pound for first-quarter losses more than doubling.
The group – which last week sent shares tumbling after warning over full-year profits – reported seasonal underlying losses of 83.6 million euros (£73.3 million) for the three months to December 31 against losses of 36.7 million euros (£32.2 million) a year earlier.
It said results were impacted by last year’s prolonged hot weather across northern Europe, combined with the Brexit-hit pound and overcapacity in western Mediterranean destinations, such as the Canary Islands.
Shares closed at the bottom of the FTSE 100, down 71.4p at 886.8p.
Debenhams’ shares jumped after the retailer secured a lifeline from its lenders as the department store chain seeks a broader refinancing deal.
The retailer confirmed an agreement with current lenders and noteholders to extend its borrowing facilities by a year with a cash injection of £40 million.
It will act as a bridge while the company continues talks for a longer-term refinancing.
Shares closed up 0.89p at 4p.
Nevertheless, David Madden, market analyst at CMC, warned that there is still a long way to go.
“The stock has rallied as the access to funds will give the group some much needed breathing space.
“Credit lines are all well and good, but Debenhams needs to undergo major restructuring to ensure its long-term survival,” he said.
In Europe, Germany’s DAX closed up 1.1% while France’s CAC 40 was also up 1.1%.
A barrel of Brent crude was trading at 62.5 US dollars, an increase of 1.5%.
The biggest risers on the FTSE 100 were NMC Health up 50p at 2,700p, DCC up 110p at 6,620p, SSE up 18p at 1,192p and Smurfit Kappa up 34p at 2,266p.
The biggest fallers on the FTSE 100 were Tui down 71.4p at 886.8p, Sainsbury’s down 10p at 283.9p, Barratt Developments down 14p at 560.2p and Persimmon down 50p at 2,395p.