The British pound slipped due to pressure over uncertainty over the terms of Britain’s departure from the European Union, though some analysts said the currency was becoming less sensitive to domestic political developments.
Sterling’s largest moves were against the perceived safe-haven yen, losing 1 percent to 137.12 as the yen went up across the board amid risk aversion across markets.
According to analysts, the broad fall in risk appetite was due to worries over the upcoming meeting between the two presidents of the United States and China.
For the pound, political risk has been in the driving seat for nine months, with the currency dropping around 17 percent against the dollar since Britain’s vote to leave the European Union last June.
But some major banks have started to say that sterling will no longer rise and fall on the slightest development surrounding Brexit, now that two years of negotiations with the European Union has formally started.
"Does sterling want to trade off a running commentary on Brexit? I think the answer is no," said Geoffrey Yu, currency strategist at UBS Wealth Management in London, adding that “Brexit fatigue” had set in among investors.
"There’s only so much the market wants to monitor. We’re now quibbling over $1.24, $1.25, but we’ve come down from $1.50, so enough of a risk premium has been priced in already."
British Prime Minister Theresa May must prove that “no deal is better than a bad deal” by offering an economic assessment on the effect of leaving the European Union with no agreement.
The British pound went down 0.1 percent at 86.61 pence per euro.