Pound gains amid Brexit morass as bank earnings boost Wall Street

New York, Jan 16: The British pound advanced Wednesday as Prime Minister Theresa May survived a no-confidence vote, while worries about the US government shutdown limited stock market gains after strong bank earnings.

The pound gained ground against the euro and dollar after May narrowly beat back a challenge to her government by a 325-306 margin a day after a humiliating defeat on her Brexit deal.

The overwhelming rejection by the House of Commons of May's plan to withdraw from the European Union prompted speculation of what would come next in the Brexit political morass.

Some are betting on another referendum or an extension of the time-frame for Britain to negotiate the terms of divorce with the EU was much more likely than the worst-case scenario of a no-deal Brexit.

"Many people may be surprised that the pound is holding firm and the UK-heavy FTSE 250 index is rising off the back of Theresa May's Brexit vote defeat," Russ Mould, investment director at stockbroker AJ Bell, said ahead of Wednesday's no-confidence vote.

"In essence the market believes we are going to get more time for negotiations, we're less likely to have a hard, economically-damaging Brexit, or Brexit won't happen at all."

But he said it seems "inevitable" that the currency and equities "will be volatile for weeks or months to come until we have a definitive answer," Mould added.

Gavin Friend at National Australia Bank, said "Momentum is shifting away from the harder Brexit route and towards a number of options ranging from postponement and second referendum."

(AFP/APP)