Sterling slid half a percent to $1.2656 after the BBC's political editor reported that two cabinet sources said May was pulling the vote, scheduled for Tuesday.

The pound also extended its losses versus the euro, trading down 0.7 percent at 90.18 pence - its weakest since early September.

Britain's exporter-heavy FTSE 100 index climbed as sterling fell, up 0.1 percent by 1150 GMT. The more domestic FTSE 250 index tumbled, down 1 percent as the reports May could delay the parliamentary vote triggered renewed uncertainty.

Perceived safe-haven British government bonds rallied on the news, with 30-year yields dropping as much as 7 basis points on the day to a 3-month low of 1.220 percent, while five-year yields fell to their lowest since January at 0.827 percent.