Sterling has recovered after being hit by a projection suggesting the Conservatives could fail to win a majority in the general election.
Previous opinion polls suggested Prime Minister Theresa May’s party would increase its majority of 17 seats.
But the projection, published in The Times and based on YouGov research, suggests a possible hung parliament.
After falling 0.5% to a six-week low of $1.2770, sterling has regained ground to be down just 0.14% at $1.2840.
The currency is 0.4% lower against the euro at 1.1446 euros.
The pound has been volatile since the UK voted to leave the European Union last year.
On the day of the referendum – 23 June – sterling hit $1.4883 but then plunged below the $1.35 mark as the result became clear.
It pound fell further in October, hit a low of $1.2047 in January this year and has struggled to stay above the $1.30 level ever since.
The YouGov data suggested that the Tories could lose up to 20 of the 330 seats they held in the last parliament, with Labour gaining nearly 30 seats.
The Conservatives would still be the biggest party, but would not have an overall majority.
George Saravelos at Deutsche Bank said: “If [Theresa] May is unable to deliver a substantially increased majority, her flexibility to negotiate will not have improved.”
Kathleen Brooks at City Index questioned the accuracy of the YouGov findings.
“This was not a poll, rather it is the outcome of a model that has used untested methodology to come up with this hung parliament conclusion,” she said. “Other polls are predicting a completely different outcome, so we would use this information with a pinch of salt.”