Pounds suffers biggest fall of the year after Dominic Raab quit over ‘blackmail’ Brexit

THE pound suffered its biggest fall of the year following the resignation of Brexit Secretary Dominic Raab over Theresa May's Brexit plan.

He claimed that Britain is being "blackmailed" by the EU as pressure mounts for the Prime Minister to resign.

It's the biggest hit for the pound since June 2017, falling by as much as 1.9 per cent against major rivals this morning.

Sterling crashed by more than one per cent against the dollar to $1.28 from $1.30 at 6am today.

It also dropped by more than one per cent against the euro from 1.14 euro in the early hours to 1.3 euro.

Yesterday the pound was the strongest it had been against the euro in nearly seven months at 1.15 as the PM managed to get her Cabinet's approval for her Brexit deal.

The last time we saw an exchange rate of 1.15 was back in April 2018.

But that was wiped out today as businesses feared a wave of government resignations could end with a No Deal Brexit.

Ian Strafford Taylor, CEO of travel currency expert, FairFX said: "Political uncertainty has a huge impact on currency and exchange rates.

"Although the pound has shown improvements against the euro, it's still down considerably compared to pre-Brexit rates.

"The highest rate we’ve seen since it was announced that the UK would leave the EU is still nine per cent lower than before the referendum."

He added: "We're not out of the water yet and it’s likely the pound will react again in the coming days."

Sterling has now stabilised against both currencies at around $1.27 and 1.2 euro at 4pm today.

Today, the pound is down 12 per cent against both the euro and US dollar compared to the day of the Brexit Referendum where the rate was 1.30 – a rate that hasn’t been seen again since the UK voted to leave the EU.

But as sterling took a dive, the FTSE 100 rose by 0.2 per cent following the resignation.

Helal Miah, investment research analyst at The Share Centre said: "I have never seen such polarised movements on a single day between UK and non-UK focussed stocks in the main index."

Within an hour of Mr Raab's resignation, Works and Pensions Secretary Esther McVey also quit, accusing Theresa May of a deal that "does not honour the result of the referendum".

First to resign was Northern Ireland Minister Shailesh Vara, warning the withdrawal agreement would leave Britain tied to "the shackles of the EU".

Suella Braverman, a junior Brexit Minister, also resigned saying: "I have reached a point where I feel that these concessions do not respect the will of the people."

And Anne-Marie Trevelyan stepped down as a Parliamentary Private Secretary warning the PM she must "secure a deal which understands the spirit of the referendum".

There are many factors that can cause the pound to go up or down against the euro or dollar, such as political speeches, agreements and interest rate rises.

In April this year, the pound rose against the dollar to the highest rate it's been since the Brexit vote.

But it took a hit against both currencies in July this year after Boris Johnson resigned from the Cabinet.

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