Pound slumps after May’s EU speech sparks fears of ‘no deal’

THE pound suffered its sharpest drop in almost a year after Theresa May’s resolute speech warning of a Brexit deadlock reignited “no-deal” fears in the City.

The Prime Minister sent the pound sliding by insisting in a defiant speech that she “will not overturn the result of the referendum nor will I break up my country” to reach a deal. She told EU leaders that the UK needs “serious engagement on resolving the two main problems” thwarting the talks.

British businesses urged the two sides to “change tack” after Mrs May reiterated that “no deal is better than a bad deal”.

The CBI warned that every day “lost in rhetoric is lost investment and lost jobs”, adding: “The stakes could not be higher. Jobs, wages and living standards are at risk, on both sides of the Channel.”

With time running out to avert a cliff edge Brexit, the impasse ended a monthlong rally in the pound. A 1.4pc plunge against the dollar, its sharpest in 11 months, dragged sterling back below the $1.31 mark while it sank as much as 1.3pc versus the euro to €1.1118, a two-week low.

Uk-exposed housebuilders bore the brunt of no-deal Brexit fears on London’s stock market.

Barratt Developments slid 17p to 560p, a 3pc tumble, while Persimmon and

Taylor Wimpey dropped 68p to £23.66 and 2.9p to 169.9p, respectively.

Sterling’s slump propelled the FTSE 100 index 122.91 points higher to 7,490.23, the strongest gain in three months. The drop boosted the index’s international-focused firms that convert overseas earnings back into sterling.

The FTSE 100 was already on the ascent as global stocks charged higher amid cooling trade tensions. A strong rally on US markets to new record highs spilt over into Asian and European trading. Global stocks hit their highest level in more than seven months while the Euro Stoxx 50, the eurozone’s blue-chip index, advanced for a 10th straight day.

Mining heavyweights topped London’s leaderboard as commodity prices enjoyed their best week since April. KAZ

Minerals and Antofagasta were buoyed by a rally in copper. The producers climbed 53p to 584p and 37.8p to 895.8p, respectively, while mining giant

Glencore jumped 15.1p to 336.8p, its highest level in almost three months.

Elsewhere, animal DNA group Genus slid to a three-month low after two new cases of African Swine Fever were discovered in China.

The disease continues to spread in the country and could devastate Asia’s pig farming sector. After warning of the potential impact of the disease earlier this month, new cases in China dragged the company 116p lower to £24.42. Trench coat maker

Burberry recovered from a 2.6pc slide despite Credit Suisse warning clients that the momentum in the luxury market is starting to fade. After suffering a 4.9pc slump on Thursday amid analysts’ fears over its revamp, it inched 4p higher to £20.12.