Sterling dropped below $1.24 to a new two-week low after a senior policymaker at the Bank of England said "prolonged high Brexit uncertainty" could warrant looser monetary policy if global growth stayed disappointing.
The pound weakened by 0.4% to $1.24 this evening after Michael Saunders' comments raised expectations that the next move from the Bank of England could be a rate cut.
The pound also weakened 0.4% against the euro to fall to 88.9 pence.
Fading hopes that Tuesday's UK Supreme Court verdict quashing Prime Minister Boris Johnson's suspension of parliament marked a big step back from a no-deal Brexit have seen the pound's gains dissolve as investors prepare for yet more uncertainty.
For the first 24 hours after the court ruled Johnson had acted unlawfully in proroguing parliament, sterling rallied.
But a vitriolic parliamentary session on Wednesday made clear that the political deadlock over Brexit is far from broken, heralding a difficult few months for the pound and other British assets.
Having risen more than 5% from a three-year low of below $1.20 on September 3 to $1.2582 last week, and popping up half a cent on the Supreme Court ruling, the pound slipped back towards $1.23 yesterday.
The main risk seen by markets is that Boris Johnson circumvents parliament's wishes and manages to take the UK out of the EU by October 31 without a deal.
The second biggest risk is a general election by year-end. Opinion polls put Johnson' Conservatives in the lead, with all that means for a Brexit crash, but markets are also wary of a Labour victory.
No overall majority would leave parliament stuck where it is now on Brexit - split down the middle.
The possibility of a Brexit extension to January 31 is hardly a balm for long-term investors either.