The FTSE 100 charged into bull market territory and the pound spiked above $1.30 after Theresa May won the race to succeed David Cameron as Prime Minister.

Traders across the City said Andrea Leadsom’s withdrawal from the Tory leadership race and Cameron’s announcement that he will resign on Wednesday triggered a relief rally worldwide.

Since the Brexit vote, global stocks have been rattled by political turmoil in the UK. However, now traders are hopeful May will provide stability during Brexit negotiations, given her “less contentious relationship with the EU” than her former rivals.

Sterling spikes above $1.30

On currency markets, the pound hit an intraday high of $1.3018, before finishing the trading session at $1.2968, up 0.11pc on the day.

Earlier, the pound floundered below $1.29 on expectations the Bank of England will slash interest rates on Thursday.

However, as the rumourmill went into overdrive that Leadsom was about to pull out of the Tory leadership race, sterling surged above $1.30.

Traders in the City said that with May at the helm it would ease political turmoil and provide some relief for the pound, which has been hammered since the Brexit vote.

Since Britain voted to leave the EU, the pound has languished at 31-year lows, plunging 13.5%. In the period from June 21 to July 8, the pound suffered its worst three weeks since the currency's 1992 crisis, when Britain fell out of the pre-euro Exchange Rate Mechanism.