Sterling fell under USD 1.26 on Monday to hit a 20-month low after Prime Minister Theresa May delayed a critical vote on her Brexit deal one day before it was due.
Just after 1600 GMT, sterling sank by more than 1.5 percent to strike USD 1.2507 -- which was the lowest level since April 2017.
That compared with USD 1.2640 before May made her official announcement in the House of Commons.
At the same time, the euro was propelled to 90.87 pence, reaching a peak last seen at the end of August.
"During Prime Minister May's speech to the House, sterling fell through USD 1.26 to trade (at) levels not seen in 20 months, bringing the 2017 lows at USD 1.19 into focus," ETX Capital analyst Michael Baker told AFP.
He added: "With the UK due to leave the European Union on March 29, the prospect of no deal and further instability is weighing on the pound." May said she had listened to the concerns of critics and in the face of a likely rejection.
The premier explained she would seek "assurances" from other European leaders ahead of an EU summit later this week in a bid to try to win back support for her maligned plan in Britain.
"If we went ahead and held the vote tomorrow the deal would be rejected by a significant margin," May told parliament.
"We will therefore defer the vote scheduled for tomorrow and not proceed to divide the house (of Commons) at this time." The British pound had already been languishing in the doldrums in the face of heightened Brexit uncertainty.
"Political uncertainly continues to gnaw away at the nerves of investors," added Rabobank analyst Jane Foley.
"Anxiety may have being triggered by Brexit -- but the future and functioning of the government is now also a threat for the pound."
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