The apparent unravelling of the prospect of any Brexit deal emerging before October 31 sent the pound plummeting on Tuesday.
But the weakness against both the euro and the dollar once again helped the FTSE 100 to avoid significant falls felt elsewhere in Europe.
The leading London index closed out the day down 54.73 points at 7,143.15 – a fall of 0.76% – compared with a 1.1% fall on Germany’s Dax and a 1.2% fall on the Paris Cac.
Connor Campbell, financial analyst at SpreadEx, said: “The FTSE managed to keep its losses down … because the pound spent the day staring down the barrel of a no-deal Brexit.
“Talks between the UK and EU seem to have struck a new low, with a No 10 source labelling the chances of an agreement ‘essentially impossible’ following a call between Boris Johnson and Angela Merkel.”
The pound fell 0.7% against the dollar to 1.2205 and was down 0.5% against the euro at 1.1143.
When sterling falls, it tends to boost the FTSE 100 because shares become “cheaper” to investors who trade in US dollars, and traders also focus on international firms, who are less exposed to domestic agendas.
Fiona Cincotta, senior market analyst at City Index, said: “Brexit-vulnerable stocks such as the house builders and domestic-focused banks dominated the lower reaches of the FTSE.”
A barrel of Brent crude oil also fell 0.8% to 57.89 dollars as fears of a global slowdown continued.
In company news, the London Stock Exchange saw off a £32 billion takeover bid by the Hong Kong stock exchange.
Despite bosses for the LSE welcoming the news – they considered the bid too low – shares in the group fell 432p to 7,020p.
Budget airline easyJet revealed a boost in demand thanks to the strikes at rivals Ryanair and British Airways.
It said it expects profit before tax for the year to September to be at the top end of company forecasts – between £420 million and £430 million.
Shareholders were less pleased – with shares plunging 88.5p, or 7.55%, to 1,084p – although some analysts suggested this was due to investors cashing out at the top.
Recruiters PageGroup and Robert Walters saw shares tumble after laying bare the impact of Brexit and global political uncertainty on the jobs market.
PageGroup fell 49.8p, or 11.9%, to 367.8p after warning over annual earnings as profit growth slowed amid “heightened political and macro-economic challenges”.
The firm reported a 2.1% rise in gross profit in the third quarter to £216.7 million, down sharply from the 7.4% growth seen in the previous three months.
Shares in fellow recruiter Robert Walters closed down 27p, or 5.5%, at 463p after it cautioned that annual pre-tax profits are expected to flatline, blaming Brexit and political uncertainty elsewhere globally.
It revealed that UK gross profits tumbled 11% to £24.8 million in the three months to September 30, hit by weak confidence among employers and candidates as Brexit takes its toll.
The biggest risers on the FTSE 100 were Polymetal, up 31.5p to 1,175p, Fresnillo, up 14p at 688.8p, Coca-Cola HBC, up 27p at 2,573p, Smurfit Kappa, up 20p at 2,444p, and Phoenix Group, up 5.2p at 664.2p.
The biggest fallers on the index were the London Stock Exchange Group, down 432p at 7,020p, Whitbread, down 162p at 3,988p, Flutter Entertainment, down 286p at 7,876p, Tesco, down 7.2p at 229.8p, and NMC Health, down 76p at 2,495p.