UK shares started the week lower as the pound jumped to a seven-week high against the US dollar.
The dollar was weaker against most currencies following the defeat of Donald Trump’s planned healthcare reforms on Friday.
Analysts say the failure to push the reforms through has raised questions over whether Mr Trump will be able to deliver his tax and spending policies.
Sterling jumped nearly 1% against the dollar to $1.2580 at one point.
The pound also rose against the euro. climbing 0.15% to 1.1567 euros.
The markets are having their own ‘Trump Tantrum’, as investors seriously doubt whether the President’s abrasive style will work in Washington,
said Kathleen Brooks, research director at City Index Direct.
“Not only does the failed healthcare bill highlight the challenges Trump may face trying to get his other policies passed, but the Congressional Budget Office also highlighted that the savings expected from Trump’s healthcare bill would be much less than expected, which could limit the size and scope of his infrastructure spending plan.”
As the pound rose, the benchmark FTSE 100 share index fell, dropping 65.49 points, or 0.9%, to 7,271.33.
The FTSE 100 often moves inversely to the pound, as many companies listed on the index earn a significant percentage of their revenues overseas. A stronger pound means overseas earnings are worth less when converted back into sterling.
Shares in BT Group fell 1.4% after the telecoms company was fined £42m by the regulator, Ofcom, over delays in installing high-speed lines. BT will also have to pay £300m to corporate customers.