Renewed speculation over the future of Theresa May sent the pound lower against other major currencies.
A report in Britain's Sunday Times newspaper said that 40 Conservative MPs had agreed to sign a letter of no-confidence in the prime minister.
Sterling fell 0.64 per cent against the dollar to $1.3105 and fell 0.62 per cent against the euro.
UK shares rose at first before falling back, and by close the FTSE 100 was down 17.81 points at 7,415.18.
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