Sterling fell against major currencies on Monday amid reports that another Scottish independence vote could be called and uncertainty about Britain’s future as it prepares to leave the European Union.

A report in the Times newspaper said UK prime minister Theresa May was getting ready for Scotland to call an independence referendum in March to coincide with the triggering of the formal Article 50 notification for the UK to start leaving the EU.

Sterling fell by as much as 0.7% to $1.2384 and fell 0.5% to 85.15p per euro.

A spokesperson for the UK prime minister told Reuters the prospect of another Scottish independence vote was creating “unnecessary uncertainty and division.”

ING FX strategist Viraj Patel wrote in a note to clients: “While (a second Scottish referendum is) a tail risk at this stage … such risks are yet to be adequately priced into the currency.”

Analysts from IronFX said in a note: “On top of soft data from the UK recently … these fresh signals of a ‘hard Brexit’ and the risk of another Scottish referendum enhances our view that the broader outlook for sterling remains negative.”

Ipek Ozkardeskaya, analyst at London Capital Group wrote: “If Scotland decides to proceed with the second referendum to quit the UK, there would certainly be another fundamental downshift in the pound’s value, both against the US dollar and the euro.”