London pre-open: Stocks seen higher as pound slides on Brexit worries

London stocks were set for a firmer open on Monday, benefiting from a weaker pound, which fell overnight amid growing concerns about a ‘hard’ Brexit.

The FTSE 100 was expected to open 13 points higher than Friday’s close at 7,350.

The pound dropped below $1.20 for the first time since the October ‘flash crash’ following a Sunday Times report that Prime Minister Theresa May will indicate in her speech on Tuesday that she plans to pursue a ‘hard’ Brexit and quit the European Union’s single market to gain more control over migration and the country’s laws.

CMC Markets' Michael Hewson said: “The weakness of the pound has been one of the key catalysts as to why the FTSE100 has managed to push strongly above its previous all-time highs, as well managing to break record after record in closing higher every day since just before Christmas.

“This pattern looks set to continue again, with a higher open for the UK benchmark, as we head into a new week after the pound fell below the 1.2000 level for the first time since the flash crash lows in October last year in Asia overnight.

“It would appear that the main catalyst behind this selloff is speculation that UK Prime Minister Theresa May will set out tomorrow the UK government’s position when it comes to coming to deal with the EU with respect to its negotiation position ahead of the expected triggering of article 50 in March, though this could still be derailed by the Supreme Court ruling which is due any day now.”

Investors will also be digesting news that US President-elect Donald Trump – who will be formally inaugurated on Friday – has promised a quick trade deal between the US and the UK after he takes office.

Away from Brexit, the latest figures from property website Rightmove showed UK house prices nudged up in January.

Prices were up 0.4% from the previous month to an average £300,245. On the year, prices were 3.2% higher in January.

In London, the average asking price for a property rose 1.4% to £624,953 and Rightmove said homeowners in the capital were showing a “marked reluctance” to put their homes up for sale, partly due to Brexit uncertainty.

In corporate news, emerging markets-focused fund manager Ashmore revealed that assets under management dropped in the second quarter of its financial year after £0.7bn of net outflows and the only period of negative market performance it has endured in 2016.

AUM declined $2.4bn in the three months to 31 December as the relatively minor outflows combined with $1.7bn of negative investment performance.

Britain’s largest brick manufacturer Ibstock anticipates earnings to be in line with expectations as revenue rose due to growing house builder activity in the second half of the year, while brick imports declined.

Revenue for the year ended 31 December increased 5% compared to last year, while revenue from clay and concrete products in the UK, which represents about 80% of total revenue, was up 2%.

Power generation equipment supplier Aggreko announced on Monday that the Government of Argentina has extended its fixed site contracts, equivalent to 174MW, until 31 December 2017.

The FTSE 250 company said the original contracts amounted to 180MW.

There are no major data due, but Bank of England governor Mark Carney is scheduled to give a speech at 1830 GMT at the London School of Economics.