Prime Minister Theresa May has announced a snap general election.
Speaking at Downing St, she announced it will take place on 8 June.
Sterling regained ground having fallen earlier in the morning as news that she was due to make a surprise announcement spread, down 0.3 per cent to $1.2528 an hour before the news of the was confirmed.
Earlier in the day it had reached a three-week high against the US dollar hitting $1.2615.
May’s statement adds to political volatility in Europe and further afield with the first round of voting in the French presidential elections set to take place this week.
May says she decided to call the election “with reluctance” but that “the country is coming together but Westminster is not”.
Since the Brexit referendum last June Labour, the Liberal Democrats, and the Scottish National Party have been vocal in their opposition to the Government’s approach to exiting the EU.
In her speech today May laid down a challenge to her opposition parties saying: “This is your moment to show you mean it”.
She warned that the decision facing the country “is all about leadership” and that the other parties must show they do not treat politics “as a game”.
She said: “They underestimate our determination to get the job done.”