Pound sterling fell to a seven-week low against the US dollar and a three-year low against the euro during morning trading in London on 3 October 2016, responding to UK Prime Minister Theresa May setting out a clearer timetable for the country to trigger Article 50 and begin the process of leaving the European Union.

Theresa May, British Prime Minister, set out the country’s plans for triggering Article 50 at the Conservative Party conference in Birmingham.

Addressing a Conservative Party conference in Birmingham, the Prime Minister said: “We will invoke Article 50 no later than the end of March next year,” indicating that Britain will leave the EU in early 2019.

Furthermore, May put an end to the notion of a second referendum based on the terms of Britain leaving the EU. “Come on!” she said. “The referendum vote was clear, it was legitimate, it was the biggest vote for change this country has ever known. Brexit means Brexit and we are going to make a success of it.”

While her speech was widely cheered by attendees at the conference, uncertainty remains regarding the exact terms of Britain’s departure from the European Union. On the one hand, May rejected the argument that Britain must initiate a so called “hard Brexit” – in which the nation regains full control over immigration but is kicked out of the European single market – and at the same time categorically stated the country would not compromise with the EU over freedom of movement, saying “we are not leaving the European Union only to give up control of immigration again.”

Brexit Secretary David Davis may have helped to calm investors’ anxiety with a more moderate speech following May’s, calling on European officials to not react impulsively on erecting barriers to trade but be open to proactive dialogue with Britain. Davis said: “It certainly won’t be to anyone’s benefit to see an increase in barriers to trade, in either direction.”

The subsequent fall in sterling, however, suggests investors are still concerned over the long-term implications of Brexit for the country.

Commenting on the pound’s reaction to the news that the UK would initiate Article 50 by the end of Q1 2017, Shilen Shah, Bond Strategist at Investec Wealth & Investment, said: “The confirmation by the Prime Minister that the UK would initiate Article 50 by the end of Q1 2017 does highlight the fact that the government is committed to leaving the EU.

“Long term, if the UK does follow through with a [so-called] ‘hard’ Brexit, Sterling has the potential to come under further pressure given the probable stalling of foreign direct investment.”

The yield on benchmark 10-year gilts, which moves inversely to its price, fell more than 2 basis points to 0.728%, as investors shifted into safe-haven assets amid the uncertainty.

The falling pound was bullish however for exchange-traded funds tracking the FTSE 100, whose constituents’ business operations are significantly export-oriented. The FTSE 100 hit 6,977, its highest level since June 2015, sending the £4.2bn iShares Core FTSE 100 UCITS ETF (LON: ISF) and the £2.3bn Vanguard FTSE 100 UCITS ETF (LON: VUKE). These ETFs are offered with total expense ratios of 0.07% and 0.09% respectively.

These ETFs and others tracking the FTSE 100 fell sharply in the immediate aftermath of the Brexit vote, but have since more than recovered and are up 11.7% compared to their pre-referendum values. Indeed, the blue-chip index just missed closing at a new record high on Tuesday 4 October – when the closing bell rang at 4.30pm it stood above its previous highest close of 7,104; however, in closing auctions it lost around 50 points to end the day at 7,074.

Laith Khalaf, Senior Analyst, Hargreaves Lansdown, commented: ‘So far this year the FTSE 100 has been lifted by rising commodity prices, a weakening pound and looser monetary policy. The reality is the biggest stocks in the index dominate its performance, and the likes of HSBC, Royal Dutch Shell, and British American Tobacco all have international earnings which are now worth more in pounds and pence thanks to sterling’s decline.”

The five biggest winners in the FTSE 100, and their respective price appreciations, between the market low on 11 February 2016 and 4 October 2016 were Anglo American (215%), Glencore (148%), Fresnillo (99%), BHP Billiton (89%) and Micro Focus International (74%).

ETFs tracking the more domestically focused FTSE 250 Index, such as the £950m iShares FTSE 250 UCITS ETF (LON: MIDD) or the £210m Vanguard FTSE 250 UCITS ETF (LON: VMID) were also up, by 1.1%.

“The UK stock market as a whole has been one of the main beneficiaries of Brexit, though some stocks and sectors have still suffered significantly since the referendum result was announced,” added Khalaf.

Investors may also find ETFs tracking FTSE 100 or FTSE 250 exposures from providers Lyxor, UBS, Deutsche Asset Management and HSBC.

UK equities received a further boost on the day by the release of the Markit/Cips UK manufacturing PMI, which recorded a score of 55.4 for September.

The Purchasing Managers’ Index (PMI) is an indicator of the economic health of the manufacturing sector. The PMI is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. A PMI over 50 represents expansion of the manufacturing sector.

By rising from 53.4 in August to 55.4, the result indicates the manufacturing sector not only continued to expand but also gathered momentum. Indeed, the level recorded indicates factory activity expanded at the fastest pace for more than two years in September, helped by stronger export orders on the back of the pound’s fall after the EU referendum. Factories also took on more workers, with employment rising for the second straight month.

Despite the surge in equity prices, Khalaf believes that UK stocks still represent a good long-term investment, noting that valuations are approximating their historic range. He said: “While UK stock market indices may be at, or near, historic highs, that does not necessarily mean UK stocks are expensive. If you compare share prices to company earnings, the valuation of the UK stock market is actually somewhere in the middle of its historic range, neither particularly cheap, nor dear, at current prices. This is in stark contrast to the former peak of the market in 1999, when the price-earnings ratio of the UK stock market stood at an eye-watering level.

The near-term path for the stock market is, as always, unpredictable. There is never any lack of macro-economic worries to deter potential investors from putting their money to work in the stock market, and that holds true today, nonetheless the historical score card suggests it is a good home for long term investment.”