The British pound fell 0.50% against the U.S. dollar after reports over the weekend suggested that some conservative members of parliament were preparing for a snap general election in autumn amid splits over Brexit.
In anticipation of a snap election, certain members have asked their local party associations to reselect them as parliamentary candidates following a clash on post-Brexit customs arrangements, The Sunday Times reported.
The reports come as British Prime Minister Theresa May's plans regarding the future customs relationship with the European Union led to a clash within her party. She wants to keep the U.K. part of the customs union after 2021 until a solution to avoid a hard Irish border is found.
There are concerns that the proposal would mean Britain remaining tied to the customs union indefinitely.
Some backbench MPs are convinced that another election is imminent after May failed to reassure them in a recent private Brexit meeting, during which she tried to stop the conflict over the future customs relationship from tearing the party.
One pro-Brexit Tory said the government is likely to struggle to come up with a solution that would be acceptable to both sides of the party. Meanwhile, opposition Labour party MPs are looking at October for an early poll.
However, Tory MPs from the "remain" camp dismissed the speculation, saying it is a technique used by the "leave" side to put more pressure on the government to quit the customs union, The Huffington Post reported.
The sterling had recovered somewhat as of 8:49 a.m. ET and was down 0.27% against the dollar. Earlier in the morning, the FTSE 100 crossed its January intraday trading peak and was up 0.64% as of 8:54 a.m. ET.