London pre-open: FTSE to climb as pound slumps further

London stocks are expected to take up where they left off the previous afternoon, rising on the back of a pound that has taken a bruising from a new wave of political confusion.

The FTSE 100 was being called 27 points higher by traders in the City, with the pound down another 0.2% to 1.3089 against the dollar, after slumping the afternoon before as Theresa May battled to keep her government together amid various important Brexit votes in the House of Commons.

Brexiteers led by MP Jacob Rees-Mogg forced May to accept an amendment to her plans for a softer Brexit that commentators say will make it even more difficult for the European Union to accept her proposed customs arrangement. Confusingly the government lost to the Brexiters by winning the Commons vote 305 to 302.

"The strongly pro-EU House of Lords will probably reject the amendment," said economist Kallum Pickering at Berenebrg, suggesting the amendment may not survive a second vote.

He added that the risk has risen that a significant number of Brexit hardliners will refuse to support May in crucial votes regardless of the consequences. "This may bring down her government and lead to snap elections unless parts of the opposition were to lend May a hand and bring her semi-soft Brexit through parliament."

Labour pulled five points in front of the Conservatives in the polls, with support for a second Brexit referendum also rising to its highest level. A YouGov poll for The Times put Labour up two points to 41%, with the Tories down one to 36%.

The next obstacle for sterling will be inflation figures later in the morning. CPI data is expected to show that inflation is on the rise once again in June, increasing to 2.6% year on year, from 2.4% in May.

Analyst Jasper Lawler at London Capital Group said: "The rebounding inflation figure could boost optimism for a BoE rate hike when they meet in two weeks’ time following Tuesday’s less encouraging slip in average earnings. But even if the data is pointing to conditions falling into place for a rate rise in August, the political landscape could be a long way from being suitable for hiking rates."

In company news, EasyJet's third-quarter revenues rose 14%, to £1.6bn, with passenger numbers ahead 9.3% at 24.4m. Looking ahead, the budget carrier said it expected full-year capacity to grow by around 4.5% while headline profits for the 12 months to 30 September should come in between £550m and £590m, up on previous guidance of between £530m and £580m.

GVC Holdings, the online gaming group that acquired bookmaker Ladbrokes in March, got a not-unsurprising boost from the World Cup in recent weeks that helped growth accelerate in the third quarter. Helped by 11% growth in the second quarter, group net gaming revenue grew 8% in the first half.

Smiths Group issued a pre-close trading update, reporting that it had successfully returned to growth with underlying revenue for the 11 months to 30 June up 3%. The FTSE 100 company said that reflected the anticipated acceleration of its growth rate in the second half, with good performances from John Crane, Smiths Detection, Smiths Interconnect and Flex-Tek.

Building materials group CRH completed the divestment of its DIY business in the Netherlands and Belgium for a total of €510m.

Plastics manufacturer RPC revealed revenue from continuing operations for its first quarter was up 5.8%, benefitting from the contribution from Astrapak, polymer price tailwinds and organic growth of 2.0%. This is down from revenue growth of 33% last year, when organic growth was 2.8%.