Global stock markets turned weaker on Wednesday after recent record gains in the US while growing concerns about a no-deal Brexit kept the pound under pressure.
By the close in Europe, London's FTSE 100 index was down 0.55%, Paris shed 0.76% and Frankfurt dropped 0.72%.
All three had been little changed earlier in the day.
The pound dropped to $1.2382, its lowest since April 2017, but recovered some lost ground by late afternoon in London to trade at $1.2433.
Sterling was also steadier against the euro after hitting fresh six-month lows.
Traders said the overall outlook depends on what happens to US interest rates as concerns continue over US-China trade tensions.
"Investors are clearly worried that the ongoing trade standoff between the US and China may hurt economic growth and require a looser monetary policy now rather than later," Fawad Razaqzada of Forex.com said in a note.
President Donald Trump hit out at what he said was a lack of follow-through from Beijing on promises to buy more farm goods just as more high-level talks were due to take place this week.
There had been hopes of some sort of progress after Trump and Chinese leader Xi Jinping agreed at the G20 last month to restart talks.
Tapas Strickland, senior analyst at National Australia Bank, said there were "no signs that tensions will abate anytime soon".
Oanda analyst Craig Erlam said there was "little doubt that the threat of no-deal Brexit is what's driving" the pound.
The battle to be Britain's next prime minister is entering the final stretch with both candidates hardening their positions on Brexit, putting the future government on a collision course with Brussels.
The business community and many lawmakers fear dire economic consequences from a no-deal Brexit which would lead to immediate trade tariffs for certain sectors including the automotive industry.
On the oil market, both main contracts were firmer after sharp losses of more than three percent on Tuesday as tensions between the US and Iran appeared to be easing.
However, prices slipped late afternoon to leave the market in the red.