London Markets: Sterling drops and FTSE 100 up after latest Brexit developments

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The U.K. pound fell on Wednesday, which provided support for the FTSE 100, as investors absorbed the latest Brexit developments and prospects for more political upheaval.

Lawmakers approved a measure advancing Prime Minister Boris Johnson’s Brexit deal in Parliament on Tuesday, but rejected a three-day approval timetable proposed by the government to meet the Oct. 31 deadline to leave the European Union. The government has already asked for an extension to the end of January 2020, and European Council President Donald Tusk said on Twitter he will recommend that request is granted.

Some believe a general election could be on the cards, given that Johnson had such slim support for his deal. In the event of a Johnson victory, he can likely implement his Brexit plan without too much trouble, but an opposition victory could open the door to a second referendum on EU membership, said analysts at Danske Bank in a note to clients.

“Regardless, it is difficult to see a path to a no-deal outcome anymore, which also explains why a lot of negativity has been priced out of the GBP,” said the analysts.

The pound GBPUSD, -0.1243%, which tumbled Tuesday after the timetable vote, slipped further to $1.2864, versus $1.2873 seen in late North American trade the same day. The FTSE 100 index UKX, +0.49%  rose 0.2% to 7,230.06.

Among stocks on the move, oil companies were supporting the U.K. index after a report that big oil producers will consider deeper production cuts when they meet in December. BP BP, +0.63% BP, +0.85% rose 0.8% and Royal Dutch Shell RDS.A, +1.13% RDSA, +0.99%  gained 1%.

Housebuilders were weaker across the board, with Persimmon PSN, -1.29%  slipping 1.8%, Barratt Developments BDEV, -1.53%  down 1.5% and Taylor Wimpey TW, -0.88%  off 1.5%.