Pound surges as support for Theresa May grows ahead of no confidence vote

The FTSE 100 and the pound have both climbed this afternoon as support grows for Theresa May ahead of tonight's no confidence vote.

The blue chip index has risen one per cent today from initial lows in early trading when it was confirmed the required 48 letters had been sent to the Conservative backbench 1922 Committee.

Conservatives will now vote in a secret ballot tonight on whether they wish May to remain leader or whether she should stand down, after she postponed a parliamentary vote on her widely unpopular Brexit deal.

Throughout the day MPs have come out in support of the Prime Minister, which in turn has led to a rebound in sterling from the 20-month lows of yesterday.

The pound began climbing after May vowed to fight the no confidence vote and has surged to 1.264 this afternoon, up 1.2 per cent for the day as more MPs have publicly supported her.

Analysts said the volatility of the pound was by no means coming to an end and expected more movement following the vote.

“If May loses tonight's vote, all hell will break loose for sterling as several scenarios that were previously tail risks become more plausible, with the net effect being to substantially increase the likelihood of a catastrophic no deal outcome,” Ranko Berich, Monex Europe analyst said.

Berich said sterling would likely continue to rise towards $1.27 until the “next lurching crisis” brings it back down.

As the FTSE 100 rallied along with the pound, UK housebuilders led the way with Berkeley Group up 4.8 per cent, Barratt Developments rising 3.6 per cent and Bellway increasing 3.9 per cent.

Smurfitt Kappa led the risers while Wood Group led the fallers, tumbling 8.5 per cent after the oil field services company warned of future market volatility.