Sterling took another Brexit battering on Friday as currency traders took a dim view of Theresa May’s impromptu speech playing up the prospects of Britain crashing out of the EU without a deal.
The pound gave up four days of gains on the US dollar to shed 1.5% and hit 1.307 at the London market close. Versus the euro, the British currency was down over 1% at 1.113.
It came after Mrs May called on the EU to come forward with fresh proposals on Northern Ireland and trade, warning that without a move from Brussels it will not be possible to make further progress in Brexit talks.
Speaking a day after the humiliating rejection of her Brexit plans at the EU summit in Salzburg, the Prime Minister recognised that negotiations had reached an “impasse”.
But she dismissed EU suggestions that the onus is on Britain to shift its stance, insisting that the ball is now in the European Union’s court.
Currency traders saw it as heightening the possibility of a disorderly no deal.
“While the market continues to react to the media headlines, positive and negative, the fact is that both sides appear no closer together.
“For many, no deal is perhaps little more than a threat with few believing that it was really a possibility. That may have changed today,” said John Goldie, foreign exchange dealer at Argentex.
As the clock ticks and the Conservative Government fails to strike a deal that it only last year described as the “easiest in history”, the pound is likely to come under intense selling pressure.
The major beneficiary of the pound’s slide was the FTSE 100, which closed the day up a massive 122.91 points, or 1.67%, at 7,490.23.
A weaker pound boosts earnings for listed multinationals, which report in dollars.
However, one stock that failed to get a boost was Just Eat, which ended the day rooted to the bottom of the index.
It came after reports surfaced that ride-sharing giant Uber, which has its own food delivery service, Uber Eats, could snap up Deliveroo in a bid to dominate the European market.
Analysts believe a combination of the companies could create “a killer brand”, eating into the market share of Just Eat.
Shares in the FTSE 100 company dropped as much as 9% in early trading before closing down 34p, or 4.8%, at 674p.
Moss Bros was hit as the menswear retailer warned over profits after hot summer weather and the World Cup “distraction” pushed the firm to a half-year loss.
Earnings show the retailer swung to a pre-tax loss of £1.7 million for the six months to July 28, having posted a profit of £3.9 million in the same period last year.
Shares closed down 6.5, or 14%, at 40p.
In Europe, Germany’s DAX closed up 0.85% while France’s CAC 40 ended up 0.78%.
Brent crude was trading flat at 78 US dollars a barrel.
The biggest risers on the FTSE 100 were Kingfisher up 13.6p at 256.3p, Glencore up 15.1p at 336.8p, Antofagasta up 37.8p at 895.8p and Tui up 54.5p at 1,424p.
The biggest fallers on the FTSE 100 were Just Eat down 34p at 674p, Smiths down 70.5p at 1,520.5p, Barratt Developments down 17p at 560p and Persimmon down 68p at 2,366p.