Pound rallies further on May victory

    The pound rose above $1.31 as markets welcomed the removal of uncertainty from the Conservatives Party’s leadership contest, with Theresa May set to be the new prime minister.

    Sterling rose 1.3% against the dollar to $1.3162, and was 1% higher against the euro at €1.1874.

    The FTSE 100 share index hit fresh 11-month highs before falling back to stand unchanged on the day at 6,683.28.

    The more UK-focused FTSE 250 index rose 129.35 points, or 0.8%, to 16,835.74.

    The property sector – which saw a steep sell-off immediately after the Brexit vote – received a boost from Galliford Try. The housebuilder said it still expected full-year profits to be in line with expectations sending its shares up 5.6%.

    The news from Galliford helped to sustain the recovery in property-related stocks seen over the past couple of trading sessions.

    Financial stocks – another victim of the post-referendum sell-off – were also having a better day. Shares in insurer Aviva rose 4.2% while Lloyds Banking Group gained 4.1%.

    “Theresa May’s virtual ‘coronation’ as prime minister has delivered a boost to the pound as the clouds of uncertainty following the Brexit vote start to disperse,” said Neil Wilson, markets analyst at ETX Capital.

    “The leadership question has been settled and two months earlier than markets had been anticipating. This is feeding into strong bids for sterling and property stocks as investors eye potential bargains.”