THE pound has suffered another significant drop after Theresa May’s speech stoked fears in the City of a no deal Brexit.

She reiterated that “no deal is better than a bad deal” and insisted that she would not agree a deal that would break up the UK or disregard the referendum result.

EU leaders firmly rejected the Chequers plan in Salzburg leaving the UK only two options.

The first suggests that the UK abides by all EU rules, which would make a mockery of the referendum.

The second option proposed a free trade agreement but the prime minister will not accept a border down the Irish Sea.

Sterling’s slump helped the main UK market end positively last week.

The currency drop boosted the international-focused firms that convert overseas earnings back into sterling. UK-exposed housebuilders, Barratt Developments, Persimmon and Taylor Wimpey, were some of the casualties that didn’t do so well and bore the brunt of no deal Brexit fears on London’s stock market.

Elsewhere global markets mostly advanced over the last week after another widely expected round of tariffs between the US and China was less severe than first feared, igniting hopes that the world’s two largest economies will eventually strike a deal on trade.

The cost of living in Britain has jumped, as consumers pay more for clothing, transport and recreation costs.

The Consumer Prices Index rose by 2.7 per cent year-on-year in August, up from 2.5 per cent in July.

The City had expected a drop to 2.4 per cent.

It means inflation is now rising faster than total pay again, highlighting the threat of a cost of living squeeze, which still looms over the UK economy.

Moss Bros shares lost nearly a third of their value after the company swung into a loss and warned profits this year would fall short of market expectations.

Stock shortages led to supply chain issues in the first quarter, while the retailer blamed the hot summer weather and focus on the football World Cup for keeping customers away.

Footfall in its stores was seven per cent lower on average with some shops reporting a 14 per cent drop in customer numbers.