The pound has tumbled after prime minister Theresa May said she would not be able to make progress on Brexit negotiations unless the European Union offered fresh alternatives to her proposals.
Sterling slumped 1.4% against the dollar to $1.308, its biggest drop of the year, after May delivered a speech following European Union leaders' rejection of her 'Chequers' plan.
'Throughout this process, I have treated the EU with nothing but respect. The UK expects the same,' she said.
'At this late stage in the negotiations, it is not acceptable to simply reject the other side’s proposals without a detailed explanation and counter proposals.
'So we now need to hear from the EU what the real issues are and what their alternative is so that we can discuss them. Until we do, we cannot make progress.'
Hamish Murress, currency analyst at OFX, said: 'Once again, the pound has shown its vulnerability to Brexit headlines.'
'The rhetoric that "no deal is better than a bad deal" is startling, and undermines recent hopes that a deal could be finalised soon.'
The pound's tumble sparked a surge on the FTSE 100, whose stocks rely on overseas markets for around three-quarters of their earnings. The UK blue-chip index rose 106 points, or 1.4%, to 7,474.
Stocks exposed to the UK domestic economy were left behind by the rally, with house builders falling towards the bottom of the index.