European markets were also down at the end of trading
The FTSE 100 has tumbled while the pound jumped higher as Rishi Sunak visited Northern Ireland in efforts to sell the benefits of his new Brexit breakthrough.
Sterling enjoyed a boost against the US dollar after the Prime Minister began his speech to convince unionists that the newly-agreed Windsor Framework addressed their concerns and would remove barriers on trade across the Irish Sea.
The pound jumped by about 0.85% to reach a two-week high of 1.2124 dollars shortly after the speech.
It then eased back and was trading up by 0.4% to 1.21 dollars when European markets closed.
Sterling also hit highs of about 1.142 against the euro, up by around 0.5%, before slipping to 1.14 when European markets closed.
Meanwhile, the FTSE 100, which is particularly internationally focused, tumbled back down after enjoying a resurgence on Monday.
It was dragged down by losses for grocer Ocado, which reported soaring losses amid reports shoppers have been switching to cheaper brands in the face of cost pressures.
Disappointing company updates from chemicals company Croda and quality control specialist Intertek also weighed on the UK’s leading index.
It closed 58.83 points lower, or 0.74%, to 7,876.28, and falling below the 7,900 mark following a recent rally.
Analysts continued to express caution over how great an impact the Brexit deal will have on the recovery of the pound.
ING economists James Smith, Chris Turner and Francesco Pesole said: “The Windsor Framework looks unlikely to deliver a step-change in UK growth prospects.
“The question is, however, whether the prospect of improved political relations with Brussels reduces some kind of hard Brexit risk premium embedded into the pound.
“More recently, the euro against the pound has been trading in line with short-term financial variables, suggesting the tail risk of a hard Brexit – meaning a complete breakdown in the post-Brexit UK-EU trading relationship – has not really featured in sterling.
“This suggests that this new agreement need not necessitate a significant sterling rally.
“Instead, we expect sterling this year to be driven by a combination of relative growth, monetary prospects and the overall risk environment.”
The German Dax slipped by 0.11% and the French Cac was down by 0.38% at close.
It was a mixed bag for markets across the pond, with the US’s S&P 500 flat and Dow Jones down by 0.5% when European markets closed.
In company news, Ocado’s shares tumbled by more than a 10th after the retailer revealed its customers cut back the number of items they loaded into virtual shopping trolleys.
It came as the group reported losses of £501 million last year, more than the £177 million in losses recorded in 2021, as it was hit by soaring costs.
Ocado’s share price was down by more than 12% at close.
Builders’ merchant Travis Perkins also saw its share price slip after revealing it axed 400 jobs and shut 19 branches at the end of last year after reporting tumbling pre-tax profits.
The firm is among those in the construction sector that have suffered knock-on effects of a housing market slowdown as well as surging cost inflation.
Its share price was 4% lower at close.
The biggest risers on the FTSE 100 were Abrdn, up 11.2p to 224.6p, Kingfisher, up 10.9p to 287.2p, St James’s Place, up 44.5p to 1,281.5p, M&G, up 6.4p to 214.3p, and Associated British Foods, up 32.5p to 2,007p.
The biggest fallers on the FTSE 100 were Ocado Group, down 76p to 548.8p, Croda International, down 366p to 6,562p, Intertek Group, down 200p to 4,174p, Bunzl, down 124p to 2,964p, and Imperial Brands, down 60p to 2,005p.
Published: 28/02/2023 by Radio NewsHub