Sterling rises after May's Brexit speech

[HONG KONG] The British pound consolidated gains on Wednesday after posting its biggest rise in nearly two decades in the previous session, while Asian stocks are set to drift lower following a weak Wall Street.

Sterling saw its biggest daily rise since at least 1998 on Tuesday as Prime Minister Theresa May promised a parliamentary vote on Britain's deal to leave the EU and sought to draw a line under discussion of a "hard" or "soft" Brexit.

It was trading at 1.2392 against the US dollar in early Asian hours after surging 2.9 per cent to a 10-day high in the previous session. That was the biggest climb since 1998, according to Thomson Reuters data.

"Taken together this should help alleviate some of the harder Brexit concerns that overall sends a positive signal to reassure UK business and investors," said James Woods, an investment strategist at Rivkin Securities in Sydney.

The pound's chunky gains rippled across the broader currency complex and put the US dollar on the back foot which has been struggling to gain momentum as doubts over Mr Trump's stimulus policies overshadowed recent strong data such as US payrolls.

The US dollar was trading at 100.44 against a broad trade-weighted basket of its peers and is down nearly 3.5 per cent from a near 15-year peak of 103.82 hit on Jan 3. Against the Japanese yen it was changing hands at 112.58.

Equity markets are expected to start on a weak footing with Australia leading stocks lower with losses of nearly 0.6 per cent. Major Wall Street indices ended between 0.3 to 0.6 per cent lower as earnings seasons got underway.

Morgan Stanley led financial stocks lower despite doubling profits in the fourth quarter after the bank's finance chief, Jonathan Pruzan, said the bank would not increase its quarterly target until it was clear that recent revenue trends were sustainable.

With doubts growing about the sustainability of the Trump trade - higher stocks and stronger US dollar - safe-haven assets glittered. Gold was perched comfortably at a two-month high above 1215 US dollars per ounce. It is up nearly 8 per cent in the last three weeks.

Oil prices were stuck in a range, with benchmark Brent futures steady at US$55.47 per barrel as a decline in the US dollar offset forecasts that US and Russian producers would boost output later this year.

REUTERS