Brexit fears are back and the pound is paying the price

Sterling dropped as much as 0.65% against the US dollar on Wednesday to just above $1.26 before recovering slightly. The currency has shed about 2.8% this month, and is on track for a record 13 straight days of declines against the euro, according to analysts.

The fall comes as Britain once again faces the prospect of a messy exit from the European Union.

Prime Minister Theresa May on Tuesday unveiled details of her final bid to get a Brexit deal through the UK parliament. Her new pitch, framed as a compromise, would let members of parliament vote on whether to hold a second referendum if they first backed her deal.

But the plan was met with opposition from across the political spectrum and appears dead on arrival.

Now pressure is building for May to step down. Conservative Party leaders met Wednesday to discuss changing party rules, a move that could have opened the door for her ouster.

In the end, they did not change the rules that protect her from a leadership challenge, a Conservative MP familiar with the meeting told CNN. But Graham Brady, the chairman of the group called the 1922 Committee, will meet with the Prime Minister on Friday to discuss her future, the source said. The source asked not to be named discussing internal party deliberations.

Blaming Brexit, British Steel collapses putting about 25,000 jobs at risk

The confusion is encouraging investors to ditch the pound, with no signs of a recovery any time soon.

Britain is due to leave the European Union on October 31, after Brexit was twice delayed. EU officials have already said they won't renegotiate the deal they agreed with May earlier this year.

If UK lawmakers continue to refuse to ratify May's deal, the country may have to leave the bloc without any measures in place to protect trade — an outcome the government itself has warned would be deeply damaging to the UK economy.

Deutsche Bank analyst Oliver Harvey said that the bank's expects May to be replaced by a pro hard Brexit Conserv- ative Party leader over the summer. This in turn increases the risks of a no deal Brexit by the end of October,

Jameel Ahmad, global head of currency strategy at FXTM, said in a note Wednesday that he expects the pound to dip to $1.25 as May's vulnerability dominates headlines.

-- CNN's Luke McGee contributed to this report

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