Pound surges after Theresa May speech

Pound - Simon Cooper/PA

The pound surged to its best performance for two years yesterday, in the wake of Theresa May's speech on the UK's approach to Brexit.

However the rise counteracted sharp falls earlier in the week when the Prime Minister’s tough talk on Brexit sent it spiralling.

The promise to put the final Brexit deal to parliament and for a phasing in period of any new arrangements was well received by the City, experts said.

May’s pledges suggest the final deal might be less stark than feared and would avoid a “cliff edge” of change that could harm trade.

Sterling ended the day’s trading nearly 3 per cent higher against the dollar at $1.2375 and almost 2 per cent up on the euro at €1.1556.

It was the biggest rise recognised in official data since records began in 1998 - and a marked change after extracts of the speech released on Sunday night pushed the pound to below $1.20 on Asian markets.

Speaking at Treasury questions in the House of Commons yesterday, Chancellor Philip Hammond said: “The Government do not comment on currency movements and we do not target an exchange rate, but I will tell the House that the pound has spiked in the last few minutes while the Prime Minister has been speaking.

“The vote to leave the EU has obviously caused some uncertainty in the movements of financial markets. More generally, the fundamentals of our economy over the last couple of years have been strong.”

However, the benchmark FTSE 100 share index lost ground as a strong pound hit profits earned overseas.