British currency pound and shares on UK bourses fell sharply after two cabinet ministers of prime minister Theresa May’s quit over the details of her draft Brexit deal. Shares of construction companies, retailers and banks have taken the worst hit of this share market downfall and while Royal Bank of Scotland (RBS) fell by 9 %, shares of Persimmon, Taylor Wimey and Barratt Developments fell by 7 percent. The pound sterling fell 1.7 % against dollar and 1.9 % against euro. Both indexes FTSE 100 and FTSE 250 closed lower and the latter, which comprises of UK based firms, fell sharply by 1.6 %.
Shares of corporates that do a majority of their business in the UK are reflecting political uncertainty in the country as members of the ruling Conservative party and opposition party members expressed their skepticism over the draft deal presented by Theresa May. While the shares of Countryside Properties fell by 9 % Capita was the biggest loser in FTSE 250 which fell by 14 % as these sectors were under pressure since the uncertainty over Brexit began. The internal tussle of minds within the Conservative Party shows that there may be another general election and possibility of Labor party coming to power.
The rising chances of election are responsible for the steep fall in shares of RBS since Labor Party said that it this continues, then it would nationalize the bank if it comes to power. But then shares in other banks fell too, as investors felt that if UK leaves EU without a deal than it would affect their balance sheets too. When PM, May had earlier announced that she had full support of her cabinet colleagues in the draft Brexit agreement the pound recovered but lost ground and ended $1.28 less against US dollar. This was largely due to several resignations, including that of Brexit Secy Dominic Rab and of Work and Pensions Secy Esther McVey.