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FTSE 100 slides as pound rises after Brexit deal rejected

British blue-chip stocks tumbled in early morning trading on Wednesday as the pound rallied, helping to drive down the share price of large multinationals in the wake of Theresa May’s historic Brexit defeat.

The FTSE 100 slid as much as 45 points to 6850, down 0.65% at 9:40am GMT on Wednesday as a stronger pound took its pulled down the share prices of large UK multinationals in the aftermath of Theresa May’s historic Brexit defeat in parliament on Tuesday evening.

The rise in the pound reflects that a hard Brexit has become less likely in the minds of investors after May’s vote was rejected in the House of Commons.

The prime minister warned MPs prior to the vote that if her deal were rejected that no Brexit would be more likely than the country bailing out of the bloc without a deal.

UK homebuilders rally after Brexit vote

Blue-chip companies make around two-thirds of their income overseas with the stronger pound helping to drag share prices down. But mid-cap players that tend to focus on the domestic market saw stocks rise, with the FTSE 250 edging higher on Wednesday morning.

But it wasn’t all bad news for British blue-chips, with UK homebuilders among the index’s top 5 performing stocks on Wednesday.

In fact, Persimmon, Taylor Wimpey, Barratt Developments and Berkeley Group all climbed 2% to 3%, with mid-market player Bovis Homes rising more than 4%.

Pound hits highest level since November

Sterling rose 0.05% against the dollar to $1.287 after May’s Brexit deal was defeated in monumental fashion as investors bet on Britain avoiding a no deal Brexit.

The pound slid by as much as 7% over the course of 2018 in response to a lack of clarity on the exact terms with which the UK will leave the EU.

Investors seem reassured that no Brexit and a second referendum appear more favourable among British MPs than the UK leaving without a deal.

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