The value of the pound dropped after a projection suggested the Conservatives could fail to win an outright majority in the election on 8 June, according to a BBC report.
Previous opinion polls suggested Prime Minister Theresa May’s party would increase their majority, which is currently 17 seats.
A new projection, however, published in the Times and based on YouGov research, suggests a possible hung parliament.
Sterling fell by more than half a percent, but recovered some losses.
The Times said the YouGov data suggests the Tories could lose up to 20 of the 330 seats they held in the last parliament, with Labour gaining nearly 30 seats.
The Conservatives would still be the biggest party, but would not have an overall majority.
The model is based on 50,000 interviews over a week, with voters from a panel brought together by YouGov
It uses a new “constituency-by-constituency” model for polling, which the paper says allows for big variations.
According to the Times, “the estimates were met with scepticism by Tory and Labour figures”.
YouGov’s chief executive, Stephan Shakespeare said the model had been tested during the EU referendum campaign, when it consistently put the winning Leave side ahead.
But he added: “It would take only a slight fall in Labour’s share and a slight increase in the Conservatives’ to result in Mrs May returning to No 10 with a healthy majority.”