Pound sinks after general election speculation

The pound has continued to fall on currency markets amid intensified political uncertainty over Brexit.

Reports of a possible snap general election weighed on sterling as MPs mulled efforts to push for a further three-month Brexit extension.

Against the dollar, it sank more than a cent to $1.2050, while against the euro, it fell below the €1.10 mark.

Prime Minister Boris Johnson has repeatedly insisted that the UK is ready to leave the EU without a deal.

Brexit is currently scheduled to happen on 31 October.

Pound v Dollar

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Under Mr Johnson, the government has toughened its stance on a no-deal Brexit, which it has said is "now a very real prospect".

The pound was trading at about $1.50 against the dollar before the EU referendum in June 2016.

Jane Foley, senior currency strategist at Rabobank, said markets were doubting whether efforts to stop a no-deal Brexit would succeed following news that Conservative MPs who defy Mr Johnson's plans could lose the whip.

Rumours of a general election had probably compounded this, she said.

"Currency markets as a rule do not like political uncertainty," she added. "What would appease investors is if legislation that would prevent no deal was passed."

Pound v Euro

Mr Johnson is considering seeking an early general election if MPs wanting to block a no-deal Brexit defeat the government this week.

Political editor Laura Kuenssberg said it could happen as soon as Wednesday, but no final decision had been taken.

Meanwhile, a cross-party group of MPs is expected to put forward legislation on Tuesday to stop no deal under "SO24" or Standing Order 24 - the rule allowing MPs to ask for a debate on a "specific and important matter that should have urgent consideration".

Sources have told the BBC the bill would force the prime minister to seek a three-month extension until 31 January if no withdrawal deal has been passed by Parliament by 19 October - the day after the next EU leaders' summit.