The pound has dropped even further against the euro amid the uncertainty surrounding the Brexit deal.
Yesterday the pound was trading at 1.126, before dropping to 1.120 today.
It comes after the prime minister Theresa May headed to Brussels to discuss a Brexit deal.
However talks have stalled as confusion rises amongst the EU leaders regarding the new relationship with the UK.
The fear of a no-deal Brexit comes after Amber Rudd declared it “unthinkable” following after Brexit Secretary David Davis told MPS that an option for leaving the EU was “sensible”.
However, the uncertainty surrounding it has caused confusion amongst MPs as they insist that it would harm the UK to consider this option.
Liberal Democrat Brexit spokesman, Tom Brake stated: “David Davis is either sneakily pushing us towards a no deal or has no idea what he’s doing.
“Either conclusion spells chaos for the British people and businesses.
TorFX currency analyst Laura Parsons commented: “Although the GBP/EUR exchange rate initially gained in reaction to the news that UK inflation had hit a five-year high, ongoing Brexit concerns prevented the pound from holding its higher levels.
“The uptick in inflation has increased the odds of the Bank of England (BoE) increasing interest rates next month.
“But with fears for a ‘no deal’ Brexit scenario far from quelled, Sterling’s upside potential is limited.
“However, GBP/EUR may gain if today’s UK jobs data shows an increase in average earnings.”
The drop also follows on from the UK inflation rates hitting a five year high.
Rising to 3 per cent in September, it is the highest reading since 2012, as stated by the Office for National Statistics (ONS).
It is set to hit households hard, with food and fuel costing more than usual, as inflation rises quicker than wages.
This could also raise the chances of an increase in interest rates next month.
