Tough talk earns sterling a pounding

STERLING took another battering as currency traders took a dim view of Theresa May’s threat of crashing out of the EU without a deal.

The pound gave up four days of gains on the US dollar to shed 1.5 per cent and hit 1.307 at the London market close.

Versus the euro, the British currency was down more than one per cent at 1.113.

It came after 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.

John Goldie, foreign exchange dealer at Argentex: “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.”

As the clock ticks and the Government fail to strike a deal that they 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 per cent, at 7490.23.

A weaker pound boosts earnings for listed multinationals, which report in dollars.