Pound tumbles as Cabinet resignations throw Prime Minister’s future in doubt
The FTSE 100 was buoyed by sterling’s decline.
The pound tumbled on Monday amid political jitters as the resignations of Foreign Secretary Boris Johnson and Brexit Secretary David Davis raised questions over Theresa May’s future as Prime Minister.
Sterling was up as much as 0.5% against the US dollar in morning trading, with Mr Davis’s original departure having been interpreted as increasing the chances of a so-called “soft Brexit”.
But the foreign secretary’s resignation in the afternoon sent the pound down nearly 0.4% to trade at 1.324.
Against the euro, sterling fell 0.3% to 1.126.
The currency’s losses propped up London’s blue chip index, which ended the session up 0.9% or 70.29 points at 7,687.99 points.
David Madden, a market analyst at CMC Markets UK, said: “The FTSE 100 has been helped by Boris Johnson’s resignation as foreign secretary, as the drop in the pound lifted the British equity benchmark.
“The departure of Mr Johnson from the Cabinet is a major blow to Theresa May’s leadership, and it could call her future into question.”
The resignations of the two Cabinet “big beasts” come just days after Mrs May secured senior ministers’ agreement at Chequers for a Brexit plan about which both men had expressed reservations.
Mr Madden said any signs of a leadership contest among the Tories could further weigh on the pound.
Across Europe, the French Cac 40 and German Dax ended the day up 0.4% and nearly 0.4% respectively.
Brent crude prices jumped 1.1% to 77.94 US dollars per barrel as investors remained concerned over US plans to reintroduce sanctions on Iran, which will hit global oil supplies.
In UK stocks, JustEat was among the best performers, rising 19.6p to 840p after it was upgraded by RBS to “outperform” with a price target of 950p.
Stobart shares jumped 7.5p to 236.5p as its chairman Iain Ferguson narrowly survived an attempt to oust him from the company, following a vote at its annual general meeting.
But the board also blocked the reappointment of its former chief executive Andrew Tinkler, which had been voted through by shareholders.
The board said it was not in the best interest of the company for Mr Tinkler – who was sacked for urging Mr Ferguson’s resignation – to become a director.
Mothercare shares fell 1.1p to 27.5p after the retailer confirmed it would close another raft of stores, meaning 60 of its outlets will be shut by June next year, putting 900 jobs at risk.
The retailer said it was putting its Childrens World division into administration, but that 13 of these 22 stores would be saved.
The changes come after Mothercare cleared a restructuring plan known as a Company Voluntary Agreement (CVA), an insolvency procedure that required the approval of the retailer’s landlords.
The group has also undertaken a significant fundraising initiative to raise £32.5 million from its existing shareholders.
The biggest risers on the FTSE 100 were Antofagasta up 32p at 976p, Melrose Industries up 5.8p at 213.9p, BHP Billiton up 44p at 1,708.2p, Evraz up 12.8p at 522.8p.
The biggest fallers on the FTSE 100 were Severn Trent down 65p at 2,003p, United Utilities Group down 17p at 766.4p, National Grid down 8.7p at 867.8p and Royal Mail down 4.3p at 486.7p.