Sterling traded lower on Tuesday after the EU and UK failed to reach an agreement on the post-Brexit Irish border.
On Monday, sterling initially leapt against the euro and US dollar on reports that draft guidelines had been agreed.
However, the pound had given up all its gains by the early evening after it emerged the deal was off the table.
A compromise agreement, with draft text referring to “regulatory alignment” between Northern Ireland and the Republic post-Brexit, had been intended to assuage worries in Dublin over the prospect of a hard border.
But UK Prime Minister Theresa May was forced to pull out of the deal after Northern Ireland’s DUP, the unionist party on which the May currently relies for a parliamentary majority, voiced its opposition.
On Tuesday, ast at 0722 GMT, sterling traded 0.35% and 0.33% lower against the euro and dollar respectively.