Pound takes a hit over Brexit fears

The pound was knocked amid fresh political turmoil as Theresa May attempted to avoid defeat on key Brexit legislation.

Sterling fell below 1.32 US dollars despite solid employment data pointing to a likely hike in interest rates from the Bank of England next month.

According to the Office for National Statistics, the number of people in work reached new record levels, while earnings remain “modestly” up on the year.

Employment increased by 137,000 in the quarter to May to 32.4 million, while average earnings increased by 2.5% in the year to May.

However, political pressures steered the pound, which was down by 0.66% against the US dollar at 1.314 in afternoon trading.

Against the euro, sterling was down 0.3% at 1.126.

Michael Hewson, chief market analyst at CMC Markets, said: “The pound has come under pressure today despite the latest unemployment and wages data keeping the prospect of an August rate rise very much on the table.”

The FTSE 100 closed the day up 0.34% or 25.88 points at 7,626.33 after suffering losses on the back of falling oil prices on Monday.

On the Continent, France’s Cac 40 was up 0.22%, while the Dax in Germany climbed 0.87%.

Oil prices were relatively stable after sliding 3% during Donald Trump’s visit to Helsinki on Monday.

Towards the end of the session, Brent crude was up 0.15% at 71.890 US dollars a barrel.