Pound hits 20-month low as Brexit vote pulled

The pound has hit a fresh 20-month low against the US dollar and stock markets are falling globally after Theresa May decided to delay the Commons vote on her Brexit deal.

Sterling fell by two cents to $1.2519, its lowest level since April 2017 - and also dipped by more than a cent and a half against the euro to just above €1.10 - as the PM outlined her position to MPs and business groups reacted with horror.

The currency has been battered by recent uncertainty about Brexit. Experts expect to see it dip sharply if there is "no deal".

:: PM postpones vote on Brexit and admits she faced "significant defeat"

The political crisis in Westminster also came in to sharper focus on global stock markets - still jittery after sharp declines over the US-China trade war and a slew of concerns for the US and wider world economy.

David Cheetham, chief market analyst at XTB, said the decision to pull the vote had increased market doubts about whether the prime minister would stay in her job.

He said: "The negative reaction in the markets is more likely due to what it means for her position rather than the failure to win the vote - with even her staunchest supporters already highly sceptical as to whether the bill would pass."

The FTSE 100 was initially trading higher on news of the vote delay.

However, sentiment sank despite support from the weaker pound, which tends to boost the value of its dollar-earning constituents.

It closed 0.8% or 56 points down at 6721.

Shares in the house building sector - which are prone to worries over Brexit - were among those worst hit, with Barratt Developments and Taylor Wimpey down by about 5% and 3% respectively.

Major European indices fared worse with the CAC in Paris and German DAX both down by 1.5%.

The Dow Jones Industrial Average in New York was 1.8% lower in early deals but later recovered that ground to trade positively.

The delay to the so-called "meaningful vote" leaves companies worldwide facing a further period of Brexit uncertainty - no more so that in the UK.

Dr Adam Marshall, director general of the British Chambers of Commerce, said: "Firms are looking on with utter dismay at the ongoing saga in Westminster, and express concern that politicians are seemingly acting in their own interest, with little regard for the millions of people whose livelihoods depend on the success of UK business and trade."

Other interest groups expressed similar frustration.

Businesses from Mr Kipling owner Premier Foods to Rolls-Royce have been speaking up increasingly in recent weeks about the preparations they have been making for a no-deal Brexit - including stockpiling goods to try to mitigate any delays at border crossings.

A number, such as Airbus and Aston Martin, have offered support for Mrs May's deal as offering the certainty they need.

However, Leave supporters in the business world such as hotelier Sir Rocco Forte and JD Wetherspoon chairman Tim Martin have spoken out against it.

The Bank of England has said that a disorderly Brexit could push the UK towards the biggest slump in modern memory, though it has been accused of scaremongering by critics including former governor Mervyn King.