Pound and UK companies battered by Brexit deal resignations

blow to Theresa May’s Brexit deal

The pound plummeted on Thursday as a series of ministerial resignations dealt a blow to Theresa May’s Brexit deal.

The currency was still sliding as the market closed, with the Prime Minister scheduled to make a statement later in the day.

Sterling was 1.8% lower against the US dollar at 1.276. It also fell 1.8% to 1.127 euro.

The sharp fall came after Brexit Secretary Dominic Raab resigned, followed shortly after by Work and Pensions Secretary Esther McVey.

Brexit Minister Suella Braverman and the Northern Ireland Minister of State Shailesh Vara also quit.

“The outlook has just grown increasingly more uncertain,” said Fiona Cincotta, senior market analyst at City Index.

“There are several possible paths from here, including a very high probability of a disorderly Brexit and possibility even a general election.

“Given the markets dislike of uncertainty, volatility, mainly in sterling but also in the FTSE, could step up going forward.”

The FTSE 100 was almost flat, gaining 4.22 points, or 0.06%, to close at 7,038.01 as multinational companies listed on the index benefited from the pound’s decline, but housebuilders and banks were in the red.

But the FTSE 250, which comprises more companies heavily exposed to the UK economy, was down 247.93 points, or 1.31%, to close at 18,662.21.

Helal Miah, investment research analyst at The Share Centre said: “In my 20 years in the city, I have never seen such polarised movements on a single day between UK and non-UK focused stocks in the main index.

“Obviously, uncertainty has increased but this brings about the possibility of two polar outcomes, either a no-deal exit or the possibility of another referendum or general election.

“A no-deal Brexit is bad enough but a general election and the possibility of Jeremy Corbyn as prime minister could be an even worse-case scenario for many businesses.”

European markets were also weighed down by uncertainty, with the French Cac falling 0.7% and the German Dax down 0.5%.

Oil prices surged following a major slump earlier in the week.

A barrel of Brent crude was 2% higher at 67.08 US dollars.

In company news, Royal Mail’s new boss pledged action to boost the group’s performance including a review of its under-pressure UK postal network as it revealed a sharp fall in profits.

The firm reported a 27% plunge in pre-tax profits to £183 million for the six months to September 23.

Shares in Bovis Homes fell by 74.5p, or 7.16%, to 966p after the housebuilder cautioned that uncertainty surrounding the UK’s departure from the European Union has put off discretionary homebuyers.

Card Factory closed 2.2p lower even as it returned to sales growth ahead of the peak festive season, overcoming “challenging” high street trading.

The greetings card and gifts chain, which has 963 stores across the UK, said like-for-like store sales edged 0.1% higher in its third quarter to October 31, while it saw a 47.3% surge in website sales.

The biggest risers on the FTSE 100 were Evraz up 27.2p to 547p, Randgold up 290p to 6,300p, Wood Group up 29p to 664p, and Antofagasta up 34.2p to 796p.

The biggest fallers on the FTSE 100 were RBS down 23.9p to 224.2p, 3i Group down 70.2p to 789.8p, Taylor Wimpey down 12.15p to 149.95p, and Barratt Developments down 40.4p to 505.4p.