The pound headed south this morning following UK politicians' failure to agree on an alternative plan to Prime Minister Theresa May's Brexit deal.

The European Union's chief negotiator also warned that the EU would not re-negotiate the agreement. 

Michel Barnier said that the UK has become more likely in the recent days to crash out of the European Union without a deal. 

"Over the last days a no-deal scenario has become more likely, but we can still hope to avoid it," Mr Barnier said.

He added that the EU was ready to accept Britain staying the EU's customs union or a relationship akin to the one the EU has with Norway.

At the start of London trading session, sterling extended losses to touch $1.3025, down 0.6% on the day. 

Against the euro, it dropped half a percent to 85.92 pence. 

May will chair a five-hour cabinet meeting today in an attempt to plot a course out of the Brexit deadlock.