The pound sterling made small upward moves the morning after Prime Minister Theresa May secured support from her own political party.
Ms. May overcame a leadership challenge within the Conservative Party late Wednesday by a 200-117 vote. Her win means she cannot be challenged again within the party for one year.
The pound made small gains over the dollar and euro within 90 minutes of U.K. market open, climbing about 0.3% to $1.267 and 0.2% to €1.113, respectively.
Despite Ms. May's victory, David Zahn, head of European fixed income at Franklin Templeton Fixed Income Group warned in a statement that her position is "precarious. And, we think the developments of the last two days have increased the chances of a hard (or no-deal) Brexit."
Mr. Zahn expects financial markets to react to the development, with gilts likely to rally, yields to decline and the pound to weaken.
On the equities side, Richard Buxton, head of U.K. equities and manager of the Merian U.K. Alpha Fund at Merian Global Investors, sees value.
"As a U.K. equity investor, my view is that we have now entered the bargain basement buying zone for domestically focused stocks," Mr. Buxton said in a statement late Wednesday. "With some shares down up to 40% from their 12-month peaks, there are some extraordinary opportunities to be seized; it is now, more than anything, a question of timing when to press the buy button."
Mr. Buxton also thinks that Ms. May's reaffirmation as leader of the Conservative party for at least one year "reduces the likelihood of her considering alternatives to the proposed deal, such as the so-called 'Norway-plus' approach, which would see the U.K. remain within the European Free-Trade Area."
"From the perspective of the financial markets," he said, "this would be preferable to the deal presently on offer, but it would be deeply unpalatable to the hard-line Brexiteers who caused the vote of confidence to be triggered in the first place. Ergo, we need to be careful what we wish for at this stage."
