The pound is rising across the board today after MPs yesterday voted overwhelmingly in favour of passing the Brext bill unamended. The FTSE 100 has had a quiet morning so far, with the index higher by 7 points at the time of writing.
MPs reject amendments to the bill
The Brexit bill has passed through the lower house of UK parliament and will now move on to the House of Lords after MPs rejected any amendments on Wednesday evening. The bill which will give the government the authority to trigger Article 50 was approved by 494 votes to 122 in the Commons and it is unlikely the Lords will stand in it’s way. A government source has warned that should the House of Lords oppose the bill, there will be an overwhelming public call for its abolishment but it seems improbable that this will occur. Theresa May’s aim to invoke Article 50 by the end of March now seems likely to be met with the upper house to begin debating the bill when they return from their recess on the 20th February.
Pound more sensitive to good news than bad
The positive reaction in the pound may seem counter-intuitive on the back of this latest development, as the bill passing through the Commons has paved the way for the formal beginning of the Brexit process which even the most ardent Brexiteer would admit will be a period of heightened uncertainty. Perhaps traders are seeing through this and believe that the sooner the UK starts the two-year window, which upon its closing will mark the exit from the EU, the closer we are to knowing what terms we will leave on. Downside risks clearly remain for the pound but in the short term the currency has reacted positively, with several developments in the past month indicating Article 50 will be triggered sooner rather than later being met with an appreciation in sterling. This suggests that, in the near-term at least, the pound is more sensitive to positive news and looking through the negatives.
Financials and Pharma stocks rise
Shares in insurance companies Legal & General, Aviva (LON:AV) and Prudential (LON:PRU) have all gained this morning as the sector has enjoyed a bright start. Barclays (LON:BARC) and Standard life are also showing notable gains as the move has seen the majority of financial stocks joining in. A solid set of earnings has contributed to the rise in GlaxoSmithKline which is one of the best performers on the FTSE 100 this morning and the move higher has boosted AstaZeneca also. After an impressive run of late Anglo American (LON:AAL) is seeing a second successive day of selling. Whilst this could be simply attributed to a pullback due to some profit taking, any further declines may worry investors and see more heading for the exit door after the stock has risen by more than 15% in the past month.