THE pound was hovering near eight-week lows on Tuesday as investors fretted over the pending trigger of Article 50 as the prospect of a second referendum on Scottish independence remained in focus.
Sterling fell more than 0.6 per cent against the US dollar in early trading, marking the lowest level since mid-January, before paring losses to trade lower by around 0.4 per cent at 1.216 by the afternoon.
The currency dropped 0.3 per cent versus the euro to around 1.142.
The pound was suffering in part from delayed investor reaction to Monday's news, when Scotland's First Minister outlined plans to launch a second independence referendum, and Downing Street signalled the Prime Minister would trigger Article 50 at the end of March.
Connor Campbell, a financial analyst at SpreadEx, said: "It appears that there are a few things in play here.
"The pound could be belatedly reacting to Nicola Sturgeon's announcement of a second Scottish independence referendum, something that it basically ignored on Monday.
"Then there is the news that Article 50 will be triggered at the end of March - hardly an unforeseen problem, but one that carries a sting in its tail nonetheless."
The pound exchange rate was also impacted by a stronger US dollar, which was on the rise in anticipation of an interest rate hike by the Federal Reserve on Wednesday, which would mark its third rate rise since the financial crisis.
The FTSE 100 fell into the red, ending the day down 0.1 per cent or 9.23 points at 7357.85 points, weighed down in part by falling oil prices.
Brent crude prices dropped to three-month lows at $50.40 per barrel (£41.45) after Opec raised its forecasts for 2017 oil output - signalling that efforts to cut production will fail to address the global glut.
Across Europe, the French Cac 40 fell 0.5 per cent while the German Dax ended the day flat.
In UK stocks, Prudential shares rose 50.5p to 1,715p after the company notched up its seventh consecutive year of double-digit growth in Asia, which helped it overcome a slump in its UK business and post a seven per cent rise in group-wide operating profits to £4.3 billion for 2016.
Shares in The Gym Group rose 5p to 185p, as the low-cost fitness chain swung out of the red with maiden pre-tax profits of £6.9 million in 2016 against losses of £12.4m the previous year.
French Connection Group inched higher by 0.13p to 35p despite reporting that pre-tax losses widened from £3.5m last year to £5.3m.
It also revealed plans to close six stores as it battles tough high street conditions.
The biggest risers on the FTSE 100 were Prudential up 50.5p to 1,715p, Unilever up 52.5p to 4,042p, Kingfisher up 4.3p to 341.1p, and Diageo up 28p to 2,299p.
The biggest fallers on the FTSE 100 were Pearson down 19.5p to 652.5p, Royal Bank of Scotland Group down 6.1p to 235.1p, Marks and Spencer Group down 7.3p to 330.5p, and Royal Dutch Shell's "B" shares down 38.5p to 2,183.5p.
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