The rally in the pound triggered by news of a Brexit agreement has failed to last following concerns that the deal could still be scuppered.
Sterling had surged to a five-month high against the dollar, coming close to $1.30, after the UK and EU’s negotiating teams agreed to a deal.
However, the pound began to lose ground after Northern Irish party the DUP said it would not vote for the deal.
By early afternoon, sterling had fallen back below $1.28.
There was a similar pattern against the euro. At first the pound jumped above €1.16, before falling back to stand at €1.1525.
Worries about the possibility of the UK leaving the EU without a deal have been weighing on the value of the pound, as markets view a no-deal Brexit scenario as damaging for the UK’s economy.
Sterling has risen in value whenever there have been signs that a deal could be reached.