Lloyds share price (LON:LLOY) sank on Thursday morning after a number of resignations from Theresa May’s cabinet plunged the government into chaos.

Lloyds shares traded as low as 54.5p, a level not hit since 2016.

Lloyds fell as part of broad selloff in domestic UK shares with banks and housebuilders being among the heaviest hit.

Lloyds, RBS and Barclays were down between 4%-7% in Thursday morning trade. Housebuilding shares also sank as Taylor Wimpey, Bovis Homes and Barratt Developments fell over 7%.

UK banks have been in a steady downtrend throughout the Brexit negotiations over the past six months and today’s sell off is taking the shares down to levels to not seen since the vote to leave the EU.

A chaotic Brexit threatens to weaken the UK economy after one of the longest expansions in global GDP in history.

Having survived the fall out of the financial crisis, UK banks have just started to turn a net profit and implement progressive dividend policies. This is now under real threat from a Brexit-induced UK economic slow down.

Resignations from Dominic Raab and Esther McVey following the acceptance of May’s Brexit proposals by the Cabinet has increased the chance of a No-deal and years of economic uncertainty.

Lloyds share price

Lloyds is one of the most heavily traded UK shares and by lunchtime on Thursday it had traded nearly the average daily volume of 150 million shares.

The spike in volume highlights the depth of the concern surrounding UK banks and the growing market consensus Brexit is likely to be to the detriment of the Uk economy.

This was particularly evident the reaction of the pound, falling over 1% against the dollar in the immediate aftermath of Dominic Raab’s resignation.

Just as Lloyds shares and the rest of the UK banking sector are flirting with the lowest levels for two years, GBP./USD is very close to 1.2700, a key support level.