The pound fell against the dollar following comments from Bank of England Monetary Policy Committee Michael Saunders that there could be a rate cut even if the government secures a Brexit deal.
The pound dropped by 0.40% against the dollar to $1.2275.
Saunders said that even if the UK avoids a no-deal exit from the European Union, uncertainty would persist and act as a kind of “slow puncture” for the UK economy.
“In this case, it might well be appropriate to maintain a highly accommodative monetary policy stance for an extended period and perhaps to loosen policy at some stage, especially if global growth remains disappointing,” he said.
“In general, I would prefer to be nimble, adjusting policy if it appears necessary to keep the economy on track, and accepting that it may be necessary to change course if the outlook changes significantly,” he added.