City urges MPs to back Brexit deal as Dominic Raab exit hits sterling

The City of London made a desperate plea for politicians to back Theresa May’s Brexit deal on Thursday as turmoil ripped through currency markets.

The City of London Corporation’s most senior figure, policy chairman Catherine McGuinness, said the deal was a “start” and urged MPs to put pragmatism and jobs ahead of politics and support the Brexit deal in next month’s parliamentary “meaningful vote”.

But the departure of Brexit Secretary Dominic Raab — the most senior of the ministers to quit in the wake of Theresa May’s Brexit deal — sent the pound tumbling more than a cent against the dollar amid growing doubts over the Prime Minister’s survival.

The pound slumped 1.85 cents to $1.2766 and took even more punishment against the euro, dropping 1.52 cents to €1.1279. Work and Pensions Secretary Esther McVey quickly followed Raab out of the Cabinet.

The groundswell of opposition among MPs of all colours leaves the deal unlikely to pass.

But McGuinness emphasised the lingering risk of a no-deal and warned: “This is a hugely politically volatile situation but I would say they have to put pragmatism and jobs and the economy ahead of politics at this critical moment. We need to be pragmatic and work out the best way forward.”

Financial services gets three paragraphs in the five-page document on the future relationship, including references to “close and structured” co-operation as well as commitments to complete assessments on a new, looser equivalence regime between the EU and the UK by June 2020.

McGuinness said this was a “start”, but added: “There is obviously a lot more to do but if this deal were agreed it would be a welcome starting point. The ‘if’ being a major word, because we’re not far off the cliff edge.”

Hammond urged business leaders to get behind the deal on a conference call last night while Susannah Storey, the acting director general at Dexeu, was also due to brief firms today.

In dealing rooms all eyes were fixed on Downing Street as Nomura’s analyst Jordan Rochester said Raab’s departure “changes the ball game”.

As bookies made the PM odds-on to be ousted before the end of the year, Rochester warned: “[It is] hard to be optimistic on the pound in the short term. But equally Theresa May has survived much worse. It’s whether we get a flood of resignations to follow.

“The news flow looks to be turning materially against the PM substantially. The end outcome is that Theresa May finds a way and the deal gets approved, the UK avoids the political pitfalls. But we’re in for a messy way through the next few hours.”

Pressure on the pound began earlier as junior Northern Ireland minister Shailesh Vara resigned but accelerated rapidly after Raab’s departure from Government. Poor retail sales figures showed a shock 0.5% slump in October, adding to the currency’s woes.

Hamish Muress, currency analyst at OFX, said: “If a vote of no confidence is called then we can expect further losses. The pound is no longer trading on the basis of a soft Brexit vs hard Brexit, but rather on the incredibly high level of uncertainty.”