The pound sank to a one-week low on Tuesday on rising doubt among investors about the progress of Brexit talks and the future leadership of the Bank of England.
Sterling fell sharply on Monday following barbed comments from European Union chief Brexit negotiator, Michel Barnier, and former foreign secretary Boris Johnson about Britain's proposals for leaving the EU.
Sentiment was further eroded by manufacturing and construction data underscoring weakness in the economy.
Investor’s attention on Tuesday, however, shifted to the question of whether Bank of England Governor Mark Carney will stay on at the helm of the central bank beyond the summer of next year.
Carney will appear on Tuesday before a regular parliamentary committee and is expected to address speculation that he will extend his tenure beyond a previously agreed departure date of next June.
The pound at GMT 09:25 was down 0.4 percent against the dollar at $1.2815, it lowest since Aug 24. Against a broadly weak euro it traded flat at 90.19 pence.