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.

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."

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.