LONDON, April 18 Sterling inched higher while UK
stocks hit a session low on Tuesday after British Prime Minister
Theresa May shocked markets by calling a early parliamentary
election for June 8.
May said in a statement outside her Downing Street office
that the government had the right plan for negotiating the terms
of Britain's exit from the European Union, and that she needed
political unity in London.
Sterling had earlier hit a three-week high of $1.2608
against a broadly weaker dollar before falling almost 1
cent after May's office said she would be making a statement
without indicating what it would concern.
After the BBC reported that May wanted an early election,
sterling inched back up, and it rose to as high as $1.2593 after
she confirmed the report in her statement. It was up 0.1 percent
on the day at $1.2580 by 1020 GMT.
"For the moment at least it is not being seen particularly
as a negative," said Simon Derrick, head of the markets strategy
team at Bank of New York Mellon in London.
"I guess people see that this may give Theresa May a better
majority. It is a politically astute move and it should provide
more stability going over the immediate aftermath of the exit
from the EU."
He added, however, that the uncertainty generated by the new
vote was likely to prevent bigger gains for sterling in the
month ahead and the FTSE 100 fell 1.2 percent on the
British government bond prices pared gains, causing the
yield on 10-year gilts to rise by around a basis
pont to 1.02 percent.
(Reporting by Jemima Kelly, Patrick Graham, David Milliken and