The prospect of a speedy trade deal had been a significant factor in Mrs May’s decision to invite Mr Trump to the UK.

US President Donald Trump started his first official visit to Britain with an undiplomatic barrage against Theresa May, saying the prime minister’s Brexit blueprint “will probably kill” any trade deal between the two allies.

“If they do a deal like that, we would be dealing with the EU instead of dealing with the UK, so it will probably kill the deal,” Mr Trump told the Sun newspaper. Mr Trump also criticised her handling of the Brexit talks as “very unfortunate”.

In a comment that will be unwelcome in Downing Street, he said Boris Johnson “would be a great prime minister”. On Monday, Mr Johnson resigned as foreign secretary in protest at the Brexit plan and could yet launch a leadership challenge.

The comments caused sterling to drop 0.6%, putting it at its worst price since the end of June, with cable trading the wrong side of $1.3125. The currency took Trump’s threat, that Theresa May’s ‘soft’ Brexit would kill a trade deal with the US, hard, with the pound also falling 0.3% against the euro. Though a lack of US trade agreement would also be awful for the FTSE, the index chose to indulge in sterling’s losses, rising 0.4%.

“Trump’s words of no deal have confirmed the fears of Brexiteers and will have stoked the fire in the hard Brexit camp, making Theresa May’s future in charge look doubtful once more,” said Jasper Lawler, head of research at London Capital Group.

“This fear was reflected in the pound as it dropped sharply in late night trading.”

A potential trade deal with the US would have benefits for businesses looking to export, and could lead to more regulatory co-operation in financial services. An agreement could also help smooth migration of highly-skilled workers.

Theresa May has said she and Donald Trump have agreed to pursue a free trade deal when the UK leaves the EU.

“With mutual investment between us already over $1 trillion we want to go further… The Chequers agreement reached last week provides the platform for Donald and me to agree an ambitious deal,” she said.

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