Cable is suffering heavy losses today -213 pts (-1.68%) and trading at fresh 18-month lows after British Prime Minister Theresa May abruptly pulled a parliamentary vote on her Brexit deal on Monday, throwing Britain’s plan to leave the European Union into chaos, after admitting that she faced a rout. May’s move on the eve of a crucial parliamentary vote opens up an array of options for the United Kingdom, including a disorderly Brexit with no deal, another referendum on EU membership, or the last minute renegotiation of May’s deal.
Meanwhile, FTSE 250 share index fell 1.5%, hitting its lowest since December 2016.
The steep falls reflect mounting uncertainty about the terms of the UK's exit from the European Union, analysts said."Until the market knows what will happen with respect to Brexit one way or the other then they [traders] will remain extremely anxious," said Jane Foley, head of foreign exchange strategy at Rabobank.
Ms Foley said the threat of a hard Brexit, under which the UK leaves the EU without a deal, as well as the continuing political uncertainty, was "an extraordinary and toxic mix" for the pound.
"Once we know what is happening, things will be more settled," she added.