Cable (GBP/USD) fell from levels as high as $1.2977 on Thursday to a multi-month low of $1.2632 on Friday morning London time. The currency pair pared some of its losses to trade at $1.2742 at 11:15 a.m. London time in volatile trade, after fluctuating overnight during Asian trading hours. Earlier, the pound fell more than 2 percent against the greenback.
The euro strengthened against the pound, with euro/sterling cross trading up 1.48 percent at 0.8770.
As no party has secured an outright majority, Britain is facing a hung parliament. However, Sky News reported Friday morning that the Conservatives have already contacted the DUP (Democratic Unionist Party) and agreed a coalition deal. U.K. leader Theresa May is expected to seek permission from the Queen to form a new government on Friday.
Analysts have said that a hung parliament could see the pound fall further.
Tapas Strickland, an economist at the National Australia Bank, said in a note that consensus was for "further downside risks to sterling with a median expectation of $1.2350 in the event of a hung parliament."