THE pound plunged yesterday, spooked by the political fall-out from the draft Brexit deal agreed between the UK and EU.
Sterling was, at 5pm in London, trading around $1.2747, down more than two-and-half cents on its previous close of $1.3011.
It was rocked by news of the resignations of Secretary of State for Exiting the European Union Dominic Raab, Work and Pensions Secretary Esther McVey, Northern Ireland minister Shailesh Vara and junior Brexit minister Suella Braverman.
David Madden, analyst at CMC Markets, observed that sterling had endured a “major sell-off” against the dollar in the wake of the resignations, “most notably” that of Mr Raab.
Mr Madden added: “Confidence in Theresa May is crumbling, and that is being reflected in the pound. Sterling has been losing ground since September.”
He cited the possibility of further falls against the dollar.
The pound also tumbled against the euro yesterday. The single currency was, at 5pm in London, trading around 88.75p, up by 1.85p on its previous close.
Shares in UK banks were also hit hard by the political tumult and heightened uncertainty over Brexit.
Royal Bank of Scotland shares dropped by nearly 10 per cent to 224.2p. Shares in Bank of Scotland owner Lloyds Banking Group fell by more than 5% to 55.45p.
The Financial Conduct Authority said it was in regular contact with financial companies as shares in UK banks tumbled.
Mr Madden also noted the impact of the political turmoil over Brexit on housebuilding stocks.
He said: "Investors are scrambling to get out of banking and housebuilding stocks. The political uncertainty is so great, dealers are cutting their exposure to the British economy, and stocks like, Lloyds, RBS, Persimmon and Barratt Developments are bearing the brunt of the decline."
Shares in Persimmon dropped more than 7% to £21.79. Barratt Developments also saw its shares fall by more than 7%, to 505.4p.
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