The pound has fallen sharply after the UK election resulted in a hung parliament.
Sterling's value had dropped overnight, and as trading began in London it slipped further,standing 2.3% lower at just below $1.27, with markets worried about heightened political uncertainty.
Against the euro, the pound was down 2% at 1.1344.
However, shares opened higher with the benchmark FTSE 100 index up 1.3% at 7,544.78 points.
A fall in the value of the pound tends to boost the FTSE 100 as the majority of companies in the index have significant operations overseas. A weaker pound means profits earned abroad are worth more when converted back into sterling.
Traders had been expecting a clear victory for Theresa May's Conservative Party, but are now concerned about political uncertainty.
"The unexpected outcome increases the threat of further volatility for sterling and UK assets," said Mark Haefele, global chief investment officer at UBS Wealth Management.
"The result is likely to call the position of the Prime Minister into question, the government is likely to be relatively weak, and the result further complicates the upcoming Brexit negotiations," he said.
The BBC is projecting that the Conservatives will be the largest party with 318 seats - eight short of a majority.
While the pound's move is significant, it is far less striking than that seen in the aftermath of the Brexit vote last June, when it plunged more than 10%.
Some analysts say that might reflect the diminishing prospect of a "hard" Brexit.
Although a hung parliament would mean uncertainty, Neil Wilson at ETX Capital said that a "softer version of Brexit" was now more likely.
"Mrs May's mandate to push through her clean, hard Brexit has evaporated. Voters didn't want to hand her the blank cheque for Brexit. It may leave negotiations in limbo but would also tend to suggest that the downside for sterling is limited," he said.
Former Business Secretary Sir Vince Cable said "the whole Brexit approach will have to be rethought".
Sir Vince is returning to the Commons after regaining the seat of Twickenham in southwest London for the Liberal Democrats.
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