THE pound tumbled to its lowest level against the US dollar in nearly a year as traders worried about the growing possibility of a no-deal Brexit.
Sterling was down more than 0.4 per cent versus the greenback at 1.287, marking its weakest point since late August 2017.
The UK currency also slipped 0.5% against the euro, falling to its lowest since October.
The pound's drop lifted the FTSE 100, as multinational firms listed on the index tend to benefit when foreign currencies are stronger than the pound.
The FTSE 100 ended the day up 0.75% or 58.17 points at 7,776.65.
Across Europe, the French Cac and German Dax ended the day down 0.4% and nearly 0.2%, respectively.
Connor Campbell, a financial analyst at SpreadEx, said: "While the rest of Europe wilted in the face of the USA's latest tariffs on Chinese goods, the FTSE benefited from the continuation of sterling's awful August.
"With the threat of a 'no-deal' Brexit - something highlighted by both Mark Carney and Liam Fox in the past few days - at the forefront of investors' minds the pound took another troublesome tumble.
"Having opened unchanged, cable slipped 0.4% as Wednesday went on, causing sterling to fall below $1.29 for the first time since the start of September 2017.
"Against the euro, meanwhile, the currency shed half a percent ... causing trouble for anyone from the UK about to go on their summer holidays."
In oil markets, Brent crude prices slumped 3.3% to $72.01 per barrel, as traders worried about reduced demand for the commodity after China said it would slap retaliatory tariffs on fuel and diesel products from the US.
In UK stocks, Paddy Power Betfair shares tumbled 580p to 7,540p after warning that full-year earnings would be knocked by extra taxes in Australia and losses from its fantasy sports business.
That was despite the company logging a 5% increase in revenues for the six months ended June 30, up from £827 million to £867m.
Prudential shares jumped 64.5p to 1,822p as it reported a 9% rise in half year profits to £2.41 billion, helped by a strong performance in its insurance and asset-management arm in Asia. In the UK, its operating profit was up 4%.
Centrica rose 2.9p to 150.8p as British Gas confirmed it was raising the price of its standard variable tariff by 3.8% on October 1.
The increase is the second for British Gas this year, having announced in April that it was increasing its prices by an average 5.5% from May 29 for both its SVT and its new Temporary Tariff fixed-rate deal.
Housebuilder Bellway fell 38p to 2,939p as investors were deflated by predictions of "more moderate" growth in house prices in the year ahead.
The biggest risers on the FTSE 100 were Prudential up 64.5p at 1,822p, Standard Life Aberdeen up 10.2p at 331.5p, Micro Focus International up 32.5p at 1,229.5p, and Ashtead Group down 62p at 2,410p.
The biggest fallers on the FTSE 100 were Paddy Power Betfair down 580p at 7,540p, Ocado Group down 10p at 1,050p, London Stock Exchange Group down 29p at 4,510p, and Anglo American down 9.6p at 1,726.6p.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here