Sterling rallies as investors count on May

The pound regained its strength as investors counted on the Prime Minister surviving a noconfidence vote brought against her leadership.

Sterling was up 1.4 per cent against the dollar at $1.266 and rose 1 per cent versus the euro to €1.114 at the London market close.

Fiona Cincotta, senior market analyst at City Index, said: “Currency markets were surprisingly buoyant in the wake of the no-confidence vote against Theresa May announced this morning, increasingly betting that the Prime Minister may be able to withstand the political pressure from her party and remain the leader of her party.”

In a secret ballot due later on Wednesday, 315 Conservative MPS will need to produce a 51 per cent majority to oust May.

However, Cincotta added that for months the party had been “deeply divided on anything to do with Brexit”, so either outcome remained possible.

Meanwhile, London’s blue-chip index closed higher as investors were optimistic about Uschina relations, but remained below the 7,000 mark.

The FTSE 100 ended the day 1.08 per cent higher at 6,880.19.

In corporate news, engine maker Rolls-royce confirmed it is pressing ahead with plans to shift design approval for large aero engines from Derby to Germany amid Brexit worries.

Meanwhile retailer Dixons Carphone, which also owns Currys PC World, saw shares plunge as much as 17 per cent after it posted losses of £440 million for the half-year to 27 October, before closing down 6 per cent at 142p.