About 100 people who went to Syria no who were dual nationals have had their British citizenship revoked. If she is a dual national, the the Home Sec is following well established precedent.
The child may or may not be British - it rather depends on the category of citizenship she held before she was deprived of it. If she was born outside Britain, and so is British by descent, her child (also born outside UK) would not be British even if she were a model citizen.
The reasons for the Home Sec's decision are not public yet, but the family or their lawyer/spokesperson might make them known.
I think but happy to be corrected by people who know better) that Article 8 of the UN Treaty on Statelessness (to which we are signatories) does allow the deprivation of citizenship, even when that renders the person stateless, in certain exceptional circumstances:
"Article 8. Contracting States shall not deprive people of their nationality so as to render them stateless. (Exceptions: where otherwise provided in the Convention; where nationality has been acquired by misrepresentation or fraud; disloyalty to the Contracting State)"
Has that been superseded?
It's sod all to do with either EU or Brexit